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HOW  AMD  WHEN  OUR  WAR  DEBT  CAN  BE  PAH). 


SPEECH 


HON.  WILLIAM  D.  KELLEY, 


OF  PENNSYLVANIA, 


ON 


THE  EXTINGUISHMENT  OF  THE  PUBLIC  DEBT; 


DELIVERED 


IN  THE  HOUSE  OF  REPRESENTATIVES,  JANUARY  3,  186? 


WASHINGTON: 

PRINTED  AT  THE  CONGRESSIONAL  GLOBE  OFFICE. 


1867. 


V, 


EXTINGUISHMENT  OF  THE  PUBLIC  DEBT. 


The  House  being  in  the  Committee  of  the  Whole 
on  the  state  of  the  Union — 

Mr.  KELLEY  said: 

Mr.  Chairman  :  Within  an  hour  of  the  open¬ 
ing  of  the  present  session  I  introduced  the 
following  resolution,  which  was  adopted  with¬ 
out  dissent : 

“That  the  Committee  of  Ways  and  Means  be  in¬ 
structed  to  inquire  into  the  expediency  of  immedi¬ 
ately  repealing  the  provisions  of  the  internal  revenue 
law  whereby  a  tax  of  five  per  cent,  is  imposed  on  the 
products  of  the  mechanical  and  manufacturing  in¬ 
dustry  of  the  country.” 

On  the  succeeding  Monday,  having  in  the 
mean  time  examined  the  report  of  the  Secretary 
of  the  Treasury,  I  submitted  the  following: 

Resolved ,  That  the  proposition  that  the  war  debt 
of  the  country  should  be  extinguished  by  the  genera¬ 
tion  that  contracted  it  is  not  sanctioned  by  sound 
principles  of  national  economy,  and  does  not  meet 
the  approval  of  this  House. 

I  hoped  that  this  resolution  would  also  re¬ 
ceive  the  immediate  assent  of  the  House,  but 
it  thought  proper  to  refer  it  to  the  Committee 
of  Ways  and  Means.  I  am,  however,  not  with¬ 
out  an  assured  hope  that  with  the  sanction  of 
that  committee  it  will  at  an  early  day  meet  the 
approval  of  the  House  and  relieve  the  country 
from  the  profound  anxiety  and  depression  cre¬ 
ated  by  the  unprecedented  propositions  of  the 
Secretary.  With  these  resolutions  in  view  I 
propose,  Mr.  Chairman,  to  detain  the  com¬ 
mittee  for  a  little  while  by  an  examination  of 
that  budget  of  inaptitudes,  incongruities,  and 
non  sequiturs — the  report  of  the  Secretary  of 
the  Treasury. 

This  report  is  indeed  a  noticeable  document. 
It  abounds  in  phrases  and  propositions  of 
doubtful  meaning;  its  abstract  propositions, 
many  of  which  as  mere  abstractions  are  true, 
and  should  be  considered  by  the  founder  of  a 


new  and  independent  community,  are  not  only 
inapplicable  but  are  contravened  by  the  inexor¬ 
able  peculiarities  of  our  condition  ;  its  abound¬ 
ing  facts  do  not  sustain  but  with  emphasis 
gainsay  the  conclusions  they  are  marshaled 
to  support ;  and  the  means  by  which  it  pro¬ 
poses  to  return  to  specie  payments  and  extin¬ 
guish  the  national  debt  within  given  periods 
would,  by  virtue  of  laws  as  fixed  as  that  of 
gravitation,  produce  bankruptcy,  individual, 
corporate,  State,  and  national,  and  postpone 
the  permanent  resumption  of  specie  payments 
for  a  quarter  of  a  century.  There  is  nothing 
in  this  report  to  gratify  one’s  national  pride. 
As  we  read  it  we  seek  excuses  for  its  author 
and  hope  we  may  be  able  to  say  for  him  that 
he  confided  its  preparation  to  a  subordinate 
who  dealt  unfairly  by  him.  It  may,  however,  be 
that  Mr.  McCulloch,  like  an  oarsman,  rowed 
one  way  and  looked  another,  and  was  too  mod¬ 
est  to  announce  his  real  purpose.  He  may 
have  improved  the  occasion  to  repair  a  neglect 
in  the  education  of  the  people ;  for  Rev.  Mr. 
Nasby  tells  us  that  the  Secretary  was  present 
at  the  Cabinet  meeting  convened  to  consider 
the  “  onparallelled  loosenin  uv  the  Nashnel- 
Union-Johnson-Dimekratic  party  in  the  vari¬ 
ous  States  wich  held  elections  on  the  9th  uv 
October  last,”  and  that  he  attributed  it  “to 
the  limited  knowledge  the  masses  hed  uv  1  In- 
geany  bankin.’  ”  But,  be  this  as  it  may,  I  am 
sure  the  country  will  sustain  the  assertion  that 
whatever  commendation  the  report  may  de¬ 
serve  or  receive  from  “Ingeany”  or  other 
bankers  it  is  marked  by  no  leading  sugges¬ 
tion  adapted  to  the  existing  exigencies  of  our 
country. 

The  Secretary’s  wisdom  is  that  of  a  man 
owning  a  thousand  fertile  acres,  who  by  the 
aid  of  a  loan  on  mortgage  had  fenced  them  in 
and  built  barns  and  all  requisite  outbuildings, 
and  gathered  live  stock  and  the  many  imple¬ 
ments  by  which  genius  has  lightened  the  labors 


o 


4 


and  increased  the  profits  of  the  farmer,  and 
who  withal  had  able-bodied  sons  to  share  his 
labors,  and  by  aid  of  these  was  accumulat¬ 
ing  a  fund  with  which  in  a  few  years  he  could 
extinguish  his  indebtedness ;  but  who  when 
a  fire  consumed  his  barns  and  implements 
and  choice  stock  would  not  use  his  savings  to 
renew  his  stock  and  implements,  but  though 
his  creditor  was  not  anxious  for  his  money 
would  sell  his  interest-bearing  bonds  and  hand 
over  the  proceeds,  his  working  capital,  as  part 
payment  of  the  mortgage  debt. 

He  who  under  such  circumstances  would 
come  to  such  a  conclusion  and  execute  it  would 
find  but  little  sympathy  among  his  neighbors. 
Eager  as  they  might  be  to  repair  his  losses  they 
would  not  be  likely  to  make  him  county  treasurer 
or  confide  the  township  funds  to  his  adminis¬ 
tration.  They  would  probably  deem  him  inad¬ 
equate  to  the  management  of  his  own  property, 
and  feel  that  their  neighborhood  was  well  rid 
of  one  who  could  thus  stupidly  sacrifice  his 
resources  and  doom  his  sons  to  idleness  or  to 
earn  laborers’  wages  on  the  land  of  strangers. 
Yet,  disavowing  all  disposition  to  exaggeration 
or  caricature,  I  present  such  an  one  as  the  pro¬ 
totype  of  our  Finance  Minister,  as  he  discloses 
himself  in  this  report. 

Witness  the  exultation  with  which  he  an¬ 
nounces  that  during  the  brief  period  of  four¬ 
teen  months,  namely,  from  August  31,  1865,  to 
October  31,  1866,  the  principal  of  our  debt  was 
reduced  $206,379,565  71.  1  wonder  whether  in 
his  exultation  Mr.  McCulloch  remembered  that 
this  immense  sum  of  more  than  $206,000,000 
had  been  added  to  the  cost  and  market  price 
of  the  product  of  but  fourteen  months  of 
American  labor  and  that  by  its  addition  to  the 
cost  and  price  of  our  home  productions  those 
of  the  underpaid  labor  of  Europe  had  been 
given  the  advantage  over  the  American  laborer 
in  our  own  markets  and  those  of  the  world.  I 
wonder  whether  in  his  pride  he  perceived  that  he 
was  announcing  the  needless  abstraction  of 
more  than  two  hundred  and  six  millions  of  active 
working  capital  from  the  business  men  of  this 
country,  many  of  whom  were  struggling  to 
maintain  infant  industries  which  had  been 
called  into  existence  by  the  war  and  needed 
the  fostering  care  of  the  Government  to  give 
them  prosperity  and  permanence.  Unfamiliar 
as  he  appears  to  be  with  the  laws  of  social 
science  and  the  history  of  their  development, 
it  is  possible  he  did  not  know  the  advantage 
he  was  giving  to  British  monopoly  over  com¬ 
peting  American  enterprise  and  industry  by 
recommending  the  continuance  of  the  excess¬ 
ive  taxation  which  enabled  him  to  pay  those 
hundreds  of  millions.  England  is  the  foe  of 
the  laborer  in  every  land.  To  maintain  her 
monopoly  she  must  undersell  other  nations 
in  their  own  markets,  and  to  effect  this  must 
depress  the  wages  of  labor  to  the  lowest  pos¬ 
sible  point  and  use  shoddy  or  other  base  mate¬ 


rial  whenever  it  can  be  done  without  immediate 
detection.  Her  capitalists  are,  we  are  assured, 
accumulating  £100,000,000  or  $500,000,000 
surplus  capital  per  annum ;  and  for  more  than 
a  century  it  has  been  their  policy  to  apply  a 
portion  of  this  surplus  to  the  destruction  of  the 
industries  of  other  nations  by  underselling 
them,  though  for  a  time  it  involved  loss  on  cer¬ 
tain  kinds  of  goods.  We  have  often  been  the 
victims  of  this  unscrupulous  policy,  and  if  the 
suggestions  of  the  Secretary  prevail  it  will 
again  prostrate  us. 

The  war  of  1812  developed  our  productive 
power  very  considerably  ;  but  in  two  years  after 
the  war  closed  the  capitalists  of  England,  by  the 
express  advice  of  her  leading  statesmen  and 
in  pursuance  of  a  deliberate  combination, 
swept  our  young  manufactures  out  of  exist¬ 
ence.  In  the  course  of  a  speech  in  Parlia¬ 
ment  in  1815,  Henry  Brougham,  exulting  over 
our  wide-spread  bankruptcy,  said  : 

“It  is  well  worth  while  to  incur  a  loss  upon  the 
first  exportation  in  order  by  the  glut  to  stifle  in  the 
cradle  those  rising  manufactures  in  the  United  States 
which  the  war  has  forced  into  existence.” 

History,  so  far  hs  that  chapter  is  concerned, 
is  repeating  itself,  and  our  market  is  glutted 
with  British  woolen  goods  which  until  our  fac¬ 
tories  shall  discharge  their  work-people  and 
suspend  operations  will  be  sold  at  less  than  cost. 
The  assessment  of  extraordinary  taxes  for  the 
extinguishment  of  the  war  debt  while  such  a 
contest  is  waging  will  make  the  victory  of  our 
enemy  an  easy  one.  The  policy  is  suicidal, 
and  will  prove  fatal  to  our  revenues  by  par¬ 
alyzing  the  productive  power  of  the  country 
and  diminishing  the  ability  of  the  people  to 
consume  either  dutiable  or  taxable  commodi¬ 
ties.  This  is  not  the  language  of  declamation. 
It  has  high  official  sanction,  among  which  is 
that  of  the  revenue  commission  appointed  by 
the  Secretary  himself,  as  will  appear  by  the 
following  extract  from  the  last  annual  report 
of  the  secretary  of  the  National  Association  of 
Wool- Growers. 

Before  presenting  this  extract  I  should  re¬ 
mark  that  the  tax  on  manufactures  has  been 
reduced  from  six  to  five  per  cent,  since  the 
preparation  of  the  official  reports  to  which  it 
refers :  > 

“  The  internal  revenue  tax  paid  in  the  year  1865 
upon  ‘  woolen  fabrics  and  all  manufactures  of  wool' 
amounted  to  $7,947,094,  being  3.79  per  cent,  upon  the 
whole  of  the  internal  revenue  collected.  How  heavily 
this  tax  bears  upon  our  manufactures  is  shown  by 
facts  presented  in  the  report  of  the  secretary  of  the 
State  of  Massachusetts  upon  the  industrial  statistics 
of  the  State  for  the  year  1865.  The  capital  invested 
in  woolens  proper  is  shown  to  have  been  $14,775,830, 
and  the  value  of  the  woolen  product  to  have  been 
$48,430,671.  Six  per  cent,  upon  the  latter  sum,  the 
amount  of  the  revenue  tax,  is  $2,905,846,  being  19.66 
per  cent.,  or  in  round  numbers  20  per  cent,  upon  the 


5 


capital  invested  in  woolens.  This  tax  has  been  paid 
cheerfully  under  the  impulses  of  patriotism.  But  it 
cannot  be  borne  long.  In’the  language  of  one  of  the 
special  reports  of  the  revenue  commission,  ‘  It  has 
no  parallel,  probably,  in  the  fiscal  regulations  of  any 
civilized  nation.  It  would  utterly  destroy  in  ten 
years  two  thirds  of  the  various  kinds  of  production 
subject  to  its  operations.’  ” 

Gentlemen  will  not  fail  to  observe  how  per¬ 
fectly  the  views  of  the  commission  are  sup¬ 
ported  by  the  facts  above  cited  in  relation  to 
.the  woolen  manufactures  of  Massachusetts. 
But  I  recur  to  the  revenue  report : 

“  A  very  large  proportion  of  the  manufacturing  es¬ 
tablishments  in  the  United  States  sell  products  year¬ 
ly  to  two  or  three  times  the  amount  of  their  invested 
capital ;  and  in  many  departments  of  production  their 
sales  yearly  amount  to  more  than  three  times  the 
cost  of  their  establishments.  If  the  capital  invested 
be  $100,000  the  sales  may  amount  to  two  or  three  hun¬ 
dred  thousand  dollars,  and  the  tax  on  that  business 
will  range  from  twelve  to  eighteen  thousand  dollars ; 
that  is,  from  twelve  to  eighteen  per  cent,  on  the  cost 
of  the  manufacturing  establishment.” 

And  again : 

“  In  every  point  of  vie\V  in  which  it  is  presented  it 
seems  clear  that  the  six  per  cent,  tax  upon  manufac¬ 
tures  will  destroy  productive  power  in  an  increasing 
progression ;  that  it  will  in  a  few  years,  if  not  removed, 
furnish  a  sad  monument  to  perpetuate  the  memory  of 
a  great  mistake.” 

Tlie  Secretary’s  time  anct  attention  have 
probably  been  so  absorbed  by  his  official  guillo¬ 
tine  that  he  has  not  been  able  to  examine  the 
reports  submitted  to  him  by  the  revenue  com¬ 
mission.  I  will,  in  the  hope  of  bringing  them 
to  his  attention,  add  to  the  foregoing  the  follow¬ 
ing  brief  extract  from  their  pi’eliminary  report 
of  last  year,  submitted  to  him  by  Mr.  Commis¬ 
sioner  Wells : 

‘‘The  remedy,  therefore,  for  the  difficulties  abfeve 
pointed  out  and  illustrated,  save  in  a  few  striking  in¬ 
stances  which  have  probably  resulted  from  oversight 
in  the  framing  of  the  law,  must,  in  the  opinion  of  the 
commission,  be  sought  for  in  such  a  revision  of  the 
present  internal  revenue  system  as  will  look  to  an 
entire  exemption  of  the  manufacturing  industry  of 
the  United  States  from  all  direct  taxation,  (distilled 
and  fermented  liquors,  tobacco,  and  possibly  a  few 
other  articles  excepted.)  This  the  commissioners  are 
unhesitatingly  prepared  to  recommend.” 

These  grave  considerations,  though  specially 
reported  to  him  by  his  own  agents,  do  not  seem 
to  have  attracted  the  attention  of  Mr.  McCul¬ 
loch;  for  while  exulting  over  the  rapid  pay¬ 
ment  of  the  debt,  without  seeming  to  detect  the 
cause  of  the  popular  emotion,  he  says : 

“  Nothing  in  our  history  has  created  so  much  sur¬ 
prise,  both  at  home  and  abroad,  as  the  reduction  of 
our  national  debt.  The  wonder  excited  by  the  ra¬ 
pidity  with  which  it  was  created  is  exceeded  by  the 

♦  > 


admiration  of  the  resolution  of  the  tax-payers  them¬ 
selves  that  it  shall  be  speedily  extinguished.” 

It  is  true,  Mr.  Chairman,  that  surprise  and 
wonder  agitate  the  practical  men  of  the  country. 
These  emotions  are  not,  however,  excited  by 
the  fact  that  we  were  able  to  bear  extraordi¬ 
nary  taxation  while  the  development  of  our 
boundless  productive  power  was  stimulated  by 
the  exigencies  of  the  war,  and  our  own  market 
was  secured  to  our  own  producers  by  the  dif¬ 
ference  between  our  lawful  currency  and  gold, 
in  which  payment  of  duties  on  imports  was  re¬ 
quired.  The  taxes  under  which  those  hundreds 
of  millions  accumulated  were  assessed  while 
war  Was  raging  and  for  war  purposes,  and  could 
have  been  borne  as  long  as  the  conditions  I  have 
indicated  were  maintained.  Wise  men  know 
this,  and  that  the  war  terminated  abruptly  and 
earlier  than  was  expected,  and  do  not  hold  the 
Secretary  accountable  for  the  results  of  this 
contingency.  No  matter  what  sacrifices  it 
involved,  the  people  would  have  cheerfully 
borne  them  rather  than  yield  the  questions 
put  at  issue  by  the  war.  But  these  questions 
have  been  happily  settled  by  war’s  arbitra¬ 
ment.  Peace  is  restored,  our  currency  approxi¬ 
mates  the  specie  standard,  and  it  is  discovered 
that  by  aid  of  our  inordinate  internal  taxes 
foreign  manufacturers  are  monopolizing  our 
home  market.  Our  publishers  buy  their  paper 
and  print  and  bind  their  books  in  England  or 
Belgium;  our  umbrella-makers  have  trans¬ 
ferred  their  workshops  to  English  towns  ;  our 
woolen  and  worsted  mills  are  closed  or  closing, 
and  the  laborers  in  these  branches  are  not 
only  wasting  their  capital,  which  consists  in 
their  skill  and  industry,  but  drawing  from  the 
savings-banks  or  selling  the  Government  bonds 
in  which  they  had  invested  their  small  accu¬ 
mulations  to  maintain  their  families  during  the 
winter ;  and  ourenlarged  importations  of  foreign 
goods  are  swelling  the  balance  of  trade  against 
us  and  preparing  us  for  general  bankruptcy. 
The  surprise  of  which  Mr.  McCulloch  speaks 
is  excited  by  the  fact  that  in  view  of  this  con¬ 
dition  of  things  the  Secretary  of  the  Treasury 
should  urge  the  maintenance  of  extraordinary 
taxes  sufficient  to  enable  him  to  apply  not  less 
than  $50,000,000  per  annum  to  the  extinguish¬ 
ment  of  our  debt  by  the  rapid  absorption  of 
the  only  portion  of  that  debt  which  bears  no 
interest.  Wonder  amounting  almost  to  awe 
does  possess  our  people,  and  it  is  excited  as 
was  that  of  the  unsophisticated  sailor  who,  in 
the  midst  of  an  exhibition  of  magical  illusions, 
was  blown  into  the  air  by  the  accidental  ex¬ 
plosion  of  powder,  and  in  his  damaged  con¬ 
dition  wondered  what  would  come  next  in  the 
order  of  exercises. 

That  the  tax-payers  have  resolved  that  the 
principal  of  our  debt  “  shall  be  speedily  extin¬ 
guished”  I  deny.  They  regard  the  attempt 
as  Quixotic,  as  destructive  of  our  industrial 
interests,  and  beneficial  only  to  money-lenders, 


6 


speculators  in  Government  securities,  and  for¬ 
eign  manufacturers.  Sir,  if  the  Secretary  is  ac¬ 
cessible  to  the  voice  of  remonstrance  he  must  by 
this  time  be  satisfied  that  there  is  no  tax-payer  in 
the  country  who  is  not  engaged  in  importing  for¬ 
eign  goods  or  in  shaving  notes,  or  who,  having 
bought  bonds  at  low  rates  in  a  depreciated  cur¬ 
rency,  hopes  to  have  them  redeemed  at  an  early 
day  in  specie,  who  does  not  dissent  from  the 
assessment  of  extraordinary  taxes  for  the  ex¬ 
tinguishment  by  the  generation  which  created 
it,  of  a  debt,  the  security  of  which  is  undoubted 
and  which  was  incurred  for  the  benefit  of  pos¬ 
terity.  The  opinion  of  the  people  on  this  ques¬ 
tion  is  modestly  expressed  by  the  editor  of  the 
ablest  and  most  instructive  of  our  industrial 
journals,  the  Iron  Age.  He  says: 

“  We  are  glad  to  see  that  aresolution  for  the  entire 
remoral  of  the  manufacturers’  tax  of  five  per  cent, 
has  been  introduced,  and  hope  it  will  be  adopted. 
As  an  independent  proposition,  outside  of  any  other 
amendment  of  the  tax  or  tariff  laws,  this  will  com¬ 
mend  itself  to  the  good  sense  of  the  country  as  one  so 
manifestly  just  that  we  should  expect  there  would  be 
a  very  general  expression  of  public  feeling  in  its 
favor.  All  classes  can  heartily  unite  in  this  effort  to 
untrammel  the  industry  of  the  country  and  to  cheapen 
production.  The  free-trader  and  protectionist  can  at 
least  here  agree;  the  workman  is  quite  as  directly 
interested  in  this  matter  as  the  employer,  for  the 
effect  of  the  tax  is  only  to  restrict  the  demand  for  the 
products  of  his  labor.  As  a  war  necessity  we  cheer¬ 
fully  accepted  this  burden  which  the  manufacturers 
of  the  country  have  borne  with  such  uncomplaining 
loyalty;  but  now  that  the  necessity  is  past,  and  that 
the  national  exchequer  is  in  such  a  condition  that  it 
can  easily  and  safely  dispense  with  the  revenue  it 
produced,  we  think  we  are  entitled,  on  behalf  of 
manufacturers  and  their  workmen,  to  demand  its 
repeal.  England,  with  all  her  load  of  taxes,  has  no 
such  impost  as  this;  her  uniform  policy  is  in  every 
way  possible  to  cheapen  the  production  of  her  wares, 
and  in  the  unequal  contest  which  we  are  called  to 
wage  with  her  it  is  in  the  last  degree  unwise  to  put 
ourselves  under  this  additional  and  unnecessary  dis¬ 
ability.” 

Sir,  this  generation  embraces  the  widows, 
orphans,  and  maimed  soldiers  of  the  contend¬ 
ing  parties  in  a  civil  war,  each  of  which  parties 
had  armies  numbering  more  than  a  million 
men  in  the  field.  They  at  least  are  in  no  con¬ 
dition  to  welcome  excessive  taxation,  espe¬ 
cially  those  of  the  South,  who  are  without  even 
the  poor  pittance  we  give  to  ours  as  pensions. 
The  folly  of  the  dull  farmer  I  have  sup¬ 
posed — a  case  of  stupidity  scarcely  probable, 
though  possible  within  the  range  of  human 
dullness — is  the  wisdom  by  which  the  Secre¬ 
tary  proposes  to  guide  the  finances  of  this 
country  and  extricate  them  from  embarrass¬ 
ments  which  in  this  report  he  depicts  as 
almost  overwhelming.  Let  us  hear  him.  He 
Bays  that — 

“He  has  been  clear  in  his  convictions  that  specie 


payments  are  not  to  be  restored  by  an  accumulation 
of  coin  in  the  Treasury  to  be  paid  out  at  a  future  day 
in  the  redemption  of  Government  obligations;  but 
rather  by  quickened  industry,  increased  produc¬ 
tion,  and  lower  prices,  which  can  alone  make  the 
United  States  what  they  ought  to  be — a  creditor  an 
not  a  debtor  nation.” 

And  as  if  to  illustrate  his  want  of  sincerity, 
or  the  confusion  of  his  ideas,  proceeds  to 
speak  of  “  certain  branches  of  industry  that  are 
now  languishing  under  the  burdens  which  have 
been  imposed  on  them;”  and  to  tell  us  that 
though  “the  people  of  the  United  States  are 
naturally  a  commercial  and  maritime  people, 
fond  of  adventure — bold,  enterprising,  persist¬ 
ent” — 

“The  disagreeable  fact  must  be  admitted,  that, 
with  unequaled  facilities  for  obtaining  the  materials, 
and  with  acknowledged  skill  in  ship-building,  with 
thousands  of  miles  of  sea-coast,  indented  with  the 
finest  harbors  in  the  world,  with  surplus  products 
that  require  in  their  exportation  alarge  and  increas¬ 
ing  tonnage,  we  can  neither  profitably  build  ships 
nor  successfully  compete  with  English  ships  in  the 
transportation  of  our  own  productions.  Twenty 
years  ago  it  was  anticipated  that  ere  this  the  United 
States  would  be  the  first*  maritime  Power  in  the 
world.  Contrary  to  our  anticipations,  our  foreign 
commerce  has  declined  nearly  fifty  per  cent,  within 
the  last  six  years.” 

And  as  if  to  impress  us  more  profoundly 
with  our  present  inability  to  bear  excessive 
taxation,  he  sets  forth  the  following  statistics: 

“The  tonnage  of  American  vessels  engaged  in  the 
foreign  carrying  trade  which  entered  United  States 
ports  was — 


In- 1860 . . . 5,921,285  tons. 

In  1865 . 2,943,661  “ 

In  1866 . 3,372,060  “ 

“The  tonnage  of  such  vessels  which  were  cleared 
from  the  United  States  was — 

In  I860 . 6,165,924  tons. 

In  1865 . 3,025,134  “ 

In  1866 . 3,383,176  “ 

“The  tonnage  of  foreign  vessels  which  entered  our 
ports  was — 

In  1860 . 2,353,911  tons. 

In  1865 . 3,216,967  “ 

In  1866 . 4,410,424  “ 

“  The  tonnage  of  foreign  vessels  which  were  cleared 
was — 

In  1860 . . 2,624,005  tons. 

In  1865  . 3,595,123  “ 

In  1866 . 4,438,384  “ 


While  admitting  that  something  of  the  dim¬ 
inution  of  our  shipping  must  be  attributed  to 
the  effects  of  the  war,  the  Secretary,  as  if  to 
prove  that  high  taxes  have  been  more  destruct- 
ive  than  war,  says : 

“The  scarcity  of  American  vessels  ought  to  have 
produced,  and  but  for  a  redundant  currency  and  high 
taxes  would  have  produced,  activity  in  our  ship-yards 
and  a  rapid  increase  of  tonnage;  but  this  has  not 


7 


been  the  case.  The  prices  of  labor  and  materials  are 
so  high  that  ship-building  cannot  be  made  profitable 
in  the  United  States,  and  many  of  our  ship-yards  are 
being  practically  transferred  to  the  British  Provinces. 
It  is  only  a  few  years  since  American  ships  were 
sought  after  on  account  of  their  superiority  and  cheap¬ 
ness;  and  large  numbers  of  vessels  were  built  in 
Maine  and  other  States  on  foreign  account  or  sold 
to  foreigners,  while  at  the  same  time  our  own  mer¬ 
cantile  marine  was  being  rapidly  increased.”  * 
*  *  *  “  It  is  an  important  truth  that  vessels 

can  be  built  very  much  cheaper  in  the  British  Prov¬ 
inces  than  in  Maine.  Nay,  further,  that  timber  can 
be  taken  from  Virginia  to  the  Provinces,  and  from 
these  Provinces  to  England,  and  there  made  into 
ships  which  can  be  sold  at  a  profit;  while  the  same 
kind  of  vessels  can  only  be  built  in  New  England  at 
a  loss  by  the  most  skillful  and  economical  builders.” 

“  The  same  causes — a  redundant  currency  and  high 
taxes — that  prevent  ship-building  tend  to  prevent 
the  building  of  houses  and  even  of  manufactories. 
So  high  are  prices  of  every  description  that  men 
hesitate  to  build  dwellings  as  fast  as  they  are  re¬ 
quired,  and  thus  rents  are  so  advanced  as  tc*  be  op¬ 
pressive  to  lessees,  and  the  healthy  growth  of  towns 
and  cities  is  retarded.  So  it  is  in  regard,  to  manu¬ 
factories.  Mills  which  were  built  before  the  war  can 
be  run  profitably,  but  so  expensive  are  labor  and 
materials  that  new  mills  cannot  be  erected  and  put 
into  operation  with  any  prospect  of  fair  returns  upon 
the  investment,  unless  upon  the  expectation  that 
taxes  will  remain  as  they  are  and  prices  be  sus¬ 
tained,  if  they  are  not  advanced.  The  same  causes 
are  injuriously  affecting  agriculture  and  other  inter¬ 
ests  which  it  is  not  necessary  to  particularize.  It  is 
everywhere  observed  that  existing  high  prices  are 
not  only  oppressing  the  masses  of  the  people,  but  are 
seriously  checking  the  development,  growth,  and 
prosperity  of  the  country.” 

What  remedies  does  our  sagacious  Secre¬ 
tary  propose  for  the  evils  he  so  truthfully  de¬ 
picts?  One,  and  apparently  in  his  judgment 
the  most  efficacious,  is  that  which  I  have  been 
considering,  namely,  to  add  not  less  than  four 
or  five  million  dollars  per  month  to  the  price 
of  American  products  by  taxing  them  to  that 
amount  for  the  express  purpose  of  extinguish¬ 
ing  so  much  of  our  national  debt!  If  gentle¬ 
men  doubt  my  statement  I  beg  them  to  give  the 
report  an  attentive  reading.  This  mad  policy 
pervades  all  its  suggestions.  Nor  is  it  to  be 
temporary.  It  is  to  be  the  fixed  policy  of  the 
Government,  and  he  says  our  debt  which, 
according  to  his  statement,  was  on  the  31st  of 
October  last  $2,551,424,121  20,  “can  be  paid 
by  the  generation  that  created  it.” 

Sir,  if  my  suspicion  that  the  preparation  of  the 
Secretary’s  report  was  .committed  to  a  treach¬ 
erous  subordinate  be  correct  gentlemen  will  be 
able  to  estimate  the  wantonness  of  that  person’s 
cruelty  by  the  fact  that  in  further  illustration 
of  the  absurdity  of  its  leading  proposition  he 
proceeds  to  tell  us  that ( ‘  between  the  years  1848 


and  the  1st  of  July,  1860,  the  product  of  the 
gold  and  silver  mines  of  the  United  States  was 
about  $1,100,000,000,”  but  that  “  it  is  not  prob¬ 
able  that  the  amount  of  gold  and  silver  now 
in  the  United  States  is  very  much  larger  than 
it  was  eighteen  years  ago.”  And  as  if  to  give 
greater  effect  to  what,  were  it  not  gravely 
trifling  with  the  prosperity  of  the  American 
people,  might  be  regarded  as  a  huge  joke,  adds 
the  fact  that  beside  exporting  all  our  bullion 
we  have,  in  exchange  for  perishable  foreign 
commodities  which  we  might  have  fabricated 
from  our  own  raw  materials,  given  to  foreign 
capitalists,  who  now  hold  them,  interest-bear¬ 
ing  evidences  of  debt  to  the  amount  of 
$600,000,000,  as  follows : 


United  States  bonds . $350,000,000 

State  and  municipal  bonds .  150,000,000 

Itailroad  and  other  stocks  and  bbnds .  100,000,000 


Total . $600,000,000 


Nor  does  he  yet  stay  his  hand  in  presenting 
reasons  why  we  should  not  adopt  his  proposi¬ 
tion,  for  he  informs  us  that  the  reports  of  the 
custom-houses  show  that  though  we  exported 
specie  during  the  fiscal  year  which  ended  June 
30,  1866,  to  the  amount  of  $82,643,374,  the 
balance  of  trade,  as  shown  by  those  reports, 
was  still  against  us  in  gold  values  $8,009,577. 
And  with  a  measure  of  candor  for  which  I 
award  him  full  credit,  adds: 

‘‘But  these  figures,  taken  from  the  reports  of  the 
custom-houses,  do  not  present  the  whole  truth.  Eor 
many  years  there  has  been  a  systematic  undervalua¬ 
tion  of  foreign  merchandise  imported  into  the  United 
States,  and  large  amounts  have  been  smuggled  into 
the  country  along  our  extended  sea-coasts  and 
frontiers.  To  make  up  for  undervaluations  and 
smuggling,  and  for  cost  of  transportation  paid  to 
foreign  shipowners,  twenty  per  cent,  at  least  should 
be  added  to  the  imports,  which  would  make  the 
balance  for  the  past  year  against  the  United  States 
nearly  $100,000,000.  It  is  evident  that  the  balances 
have  been  largely  against  the  United  States  for  some 
years  past,  whatever  may  have  been  the  custom¬ 
house  returns.” 

Mr.  Chairman,  I  confess  my  ignorance  of 
“  Ingeany  bankin’,”  and  will  proclaim  my 
gratitude  to  any  of  its  disciples  who  will  so  far 
admit  me  to  its  mysteries  as  to  enable  me  to 
reconcile  the  Secretary’s  premises  and  conclu¬ 
sions. 

Meanwhile  I  ask  who  but  he,  unless  it  be 
bankers  and  shavers  of  notes,  importers  of 
foreign  goods,  and  holders  of  our  bonds  who 
desire  to  get  two  dollars  for  every  one  they  in¬ 
vested  in  them,  who  but  these  does  not  see 
in  this  fearful  array  of  evidences  of  our  tend¬ 
ency  to  universal  bankruptcy  a  necessity  for 
developing  our  productive  power  by  diminish¬ 
ing  the  internal  taxes  of  the  country  to  the 
lowest  possible  amount  consistent  with  an 
economical  administration  of  the  Government? 


8 


And  who  but  these  does  not  see  that  by  con¬ 
tinuing  the  course  we  are  pursuing  we  are 
retarding  the  permanent  resumption  of  specie 
payments  and  postponing  the  day  when  we 
shall  be  able  to  enter  judiciously  upon  the 
extinguishment  of  our  debt? 

Mr.  McCulloch  does  not  seem  to  perceive 
that  this  fearful  array  of  facts  is  but  so  many 
concurrent  items  of  evidence  that  notwith¬ 
standing  our  freedom,  enterprise,  and  energy, 
and  our  infinitely  diverse,  easily-accessible, 
and  inexhaustible  stores  of  natural  wealth,  our 
extended  sea-coast,  fine  harbors,  broad  lakes, 
and  far-rolling  rivers,  which  invite  us  to  manu- 
ufacturingand  maritime  effort  and  preeminence, 
we  are  but  a  mere  commercial  dependency. 
Like  all  other  debtors  we  are  at  the  mercy  of 
our  creditors.  Though  richer  in  natural  re¬ 
sources  than  all*  of  them  combined  the  con¬ 
tinuance  of  our  prosperity  is  dependent  upon 
the  caprices  or  necessities  of  England  and  the 
nations  of  Europe,  which,  by  protecting  their 
industry  and  importing  only  raw  material  or 
commodities  but  slightly  wrought  and  export¬ 
ing  products  as  much  manufactured  as  possi¬ 
ble,  practice  economies  unknown  to  us,  and  by 
diversifying  their  industry  provide  remunera¬ 
tive  employment  for  all  their  people. 

Manufactures  and  agriculture  are  each  the 
handmaid  of  the  other,  and  the  successful  prac¬ 
tice  of  both  is  prerequisite  to  profitable  and 
sustained  commerce.  That  sea-board  nation 
which  most  diversifies  its  productions  and  best 
protects  its  skilled  labor  against  unequal  com¬ 
petition  will  ever  be  foremost  in  the  race  for 
commerce. 

No,  sir  ;  the  Secretary  does  not  see  the  proper 
application  of  the  facts  he  cites,  and  while  di¬ 
lating  upon  them  illustrates  his  profound  ignor¬ 
ance  of  the  progress  social  science  has  made 
by  reiterating  trite  maxims  from  English  hand¬ 
books  of  political  economy  to  prove  that  inter¬ 
national  trade-balances  are  settled  with  gold 
and  silver  and  that  the  flow  of  specie  “indi¬ 
cates  the  condition  and  results  of  trade  between 
different  nations.”  In  the  light  of  these  laws 
1  point  him  and  the  country  to  the  fact  that  the 
trade  between  us  and  foreign  nations  has  car¬ 
ried  them  our  cotton  and  wool,  our  beef,  pork, 
grain,  and  other  staples,  and  $1,100,000,000 
of  our  bullion  with  $600,000,000  of  our  bonds 
to  pay  for  wines,  silks,  laces,  cloths,  &c. ,  and 
iron  rails  to  stretch  across  the  coal  and  iron 
beds  which  underlie  our  country  from  the  Atlan¬ 
tic  coast  to  the  Pacific  and  from  the  lakes  to 
the  Gulf,  and  ask  them  if  the  facts  do  not  indi¬ 
cate  bankruptcy  as  the  “result”  if  the  present 
and  past  “condition”  of  that  trade  be  main¬ 
tained.  And  whether,  when  as  now  we  are 
compelled  to  look  to  our  internal  taxes  for  the 
bulk  of  our  receipts,  when  duties  on  foreign 
imports  could  under  no  possible  system  pro¬ 
vide  us  with  adequate  income,  it  would  not  be 
well  as  a  pure  question  of  revenue  to  so  adjust 


our  taxes  as  to  relieve  American  labor  and 
land  from  every  possible  exaction  and  by  every 
possible  device  to  stimulate  the  development 
of  our  productive  power  and  the  immigration 
of  skilled  laborers  into  the  country?  Thus, 
and  thus  alone,  can  we  check  the  flow  of  specie 
and  bonds  to  Europe  and  retain  among  us  as 
capital  the  production  of  our  gold  and  silver 
mines  with  which  to  redeem  the  $600,000,000 
of  bonds  now  held  by  foreigners.  This  the 
Secretary  professes  to  desire,  but  how  the 
imposition  of  extraordinary  taxes  upon  our 
industry  to  the  amount  of  $50,000,000  per 
annum  is  to  promote  it  he  has  not  condescended 
to  inform  us. 

The  scheme  of  the  Secretary  is  as  unprece¬ 
dented  as  it  is  unwise.  It  is  without  a  single 
historical  example.  The  first  Federal  debt 
was  funded  in  1791,  and  for  sixteen  years  no 
effort  was  made  to  reduce  it.  In  1807  the 
receipts  of  the  Government  from  ordinary 
sources  were  in  excess  of  current  expenses,  and 
the  surplus  was  applied  to  the  debt.  This 
easy  and  natural  process  of  extinguishment 
continued  till  1812.  The  average  rate  of  pay: 
ment  per  annum  from  1807  to  1812  was  about 
$6,000,000,  and  at  the  breaking  out  of  the  war 
with  Great  Britain  the  debt  had  been  reduced 
from  $75,000,000  to  $45,000,000.  It  was 
swollen  by  that  war  to  $127,000,000  ;  but  no 
extraordinary  taxes  were  imposed  for  its  re¬ 
demption.  The  revenues  of  the  Government 
were  derived  from  ordinary  sources,  and  such 
balances  as  remained  after  paying  current 
expenses  were  applied  to  its  absorption.  No 
statesman  of  either  period  proposed  to  cripple 
industry  and  retard  the  development  of  the 
country  by  the  imposition  of  extraordinary 
taxes  as  a  means  of  extinguishing  its  debt. 
They  wisely  stimulated  both  by  imposing  higher 
duties  upon  foreign  importations,  and  under 
the  avowedly  protective  tariffs  of  1824  and  1828 
paid  it  off.  Such  a  spectacle  had  never  been 
witnessed  before,  for  no  other  nation  had  ever 
liquidated  its  entire  debt. 

The  American  people  will  rather  follow  the 
successful  example  of  the  statesmen  of  those 
days  and  foster  our  industry  than  accept  the 
crotchets  of  our  present  Secretary  of  the  Treas¬ 
ury  and  cripple  labor  and  diminish  production 
by  extraordinary  taxation.  They  freely  lent 
their  substance  to  the  Government  and  hold 
more  than  eighty  per  cent,  of  our  national 
securities,  and  none  of  them  are  demanding 
payment.  Nor  need  we  be  specially  anxious 
about  that  part  of  our  bonds  that  are  held  in 
Europe.  They  who  hold  them  bought  them  as 
investments  or  as  matter  of  speculation.  As 
investments  they  pay  better  interest  than  the 
holders  can  elsewhere  obtain  with  equal  secur¬ 
ity,  and  we  are  not  required  to  prostrate  our 
industry  by  a  vain  attempt  to  hasten  the  day 
on  which  foreign  speculators  shall  realize  an¬ 
ticipated  profits.  England  has  never  been 


9 


guilty  of  such  stupidity.  When  the  Napoleonic 
wars  closed  the  governing  class  of  England  held 
her  bonds,  and  like  the  money-changers  and 
“Ingeany”  bankers  of  our  country  clamored 
for  the  resumption  of  specie  payments  that  they 
might  get  par  for  the  bonds  which  they  had 
bought  during  those  wars  at  such  prices  as  our 
own  sold  for  and  in  paper  as  irredeemable  and 
depreciated  as  ours  has  been.  By  this  operation 
they  would  .have  made  an  average  of  one  hun- 
-dred  per  cent,  on  their  investments.  But  govern¬ 
ing  class  as  they  were,  it  was  not  until  seven 
years  after  the  close  of  the  war  that  the  states¬ 
men  who  controlled  the  financial  affairs  of 
Great  Britain  attempted  the  experiment  of  a 
resumption,  or  till  the  suspension  had  endured 
for  well  nigh  a  quarter  of  a  century.  And  only 
within  a  few  years — I  think  I  may  say  within 
the  present  decade — has  England  made  serious 
effort  to  reduce  the  principal  of  her  debt,  nor 
has  she  yet  imposed  an  extraordinary  tax  for 
the  purpose.  Her  statesmen  knew  that  her 
population  was  increasing  and  her  productive 
power  in  process  of  rapid  development,  and 
they  know'  also  that  so  long  as  the  interest  is 
ready  at  maturity  and  the  creditors  of  the  nation 
see  that  its  taxes  are  steadily  diminishing  and 
its  population  and  resources  increasing,  they 
will  regard  the  investment  as  safe. 

Thus  has  England,  while  permitting  her  debt 
to  increase,  by  showing  her  steady  ability  to 
diminish  the  taxes  upon  her  people  and  pro¬ 
vide  for  interest  and  current  expenditures 
been  able  to  reduce  the  interest  on  her  debt 
from  war  rates  to  the  low  rates  at  which  she 
now  holds  it;  and  that  debt  which  by  its  im¬ 
mense  volume  seemed  to  overshadow  her  whole 
future,  is  now  not  in  the  proportion  of.ten  per 
cent,  per  man,  per  dollar,  and  per  acre  to  what 
it  was  at  the  date  of  the  treaty  of  Paris.  So 
will  it  be  with  us  if  we  shun  the  nostrums  of 
the  Secretary  of  the  Treasury.  The  estimated 
wealth  of  the  loyal  States  at  this  time  is 
$17,428,000,000  and  their  annual  product 
$4,685,000,000.  But  thirty  years  hence,  if 
the  progress  of  our  growth  is  not  retarded  by 
financial  charlatanism,  the.  wealth  of  those 
States  will  be  $90,000,000,000,  and  the  annual 
product  amount  to  $23,000,000,000,  and  the 
now  prostrate  but  naturally  richer  South  will 
then  rival  the  people  of  the  North  in  prosper¬ 
ity  and  tax-paying  power. 

Let  me,  Mr.  Chairman,  as  it  is  due  to  the 
Secretary  I  should  say,  that  he  does  not  rest 
this  urgent  demand  for  the  speedy  extinguish¬ 
ment  of  the  debt  upon  principles  of  social 
science  or  national  economy.  In  this  matter 
his  head  yields  to  his  heart.  He  is  guided  by 
a  sentiment.  He  prides  himself  upon  his  mag¬ 
nanimity,  and  would  ruin  the  industry  of  the 
North  and  retard  the  development  of  our  coun¬ 
try  for  a  century  if  need  be  rather  than  wound 
the  sensibilities  of  our  u  erring  southern  breth¬ 
ren.”  Thus,  after  indulging  in  some  trite 


reflections  upon  the  evil  of  public  debt  in 
general,  he  tells  us  that — 

‘‘To  the  perpetuation  of  the  existing  debt  of  the 
United  States  there  are  also,  it  may  be  proper  to 
remark,  serious  objections  growing  out  of  the  cir¬ 
cumstances  under  which  it  was  created.  Although 
incurred  in  a  great  struggle  for  the  preservation  of 
the  Government,  and  therefore  especially  sacred  in 
its  character,  its  burdens  are  to  be  shared  by  those 
to  whom  it  is  a  reminder  of  humiliation  and  defeat. 
It  is  exceedingly  desirable  that  this,  with  other  causes 
of  heart-burnings  and  alienation,  should  be  removed 
as  rapidly  as  possible,  and  that  all  should  disappear 
with  the  present  generation,  so  that  there  may  be 
nothing  in  the  future  to  prevent  that  unity  and  good 
feeling  between  the  sections  which  are  necessary  for 
true  national  prosperity.” 

To  others  thanth-e  Secretary  it  is  known  that 
the  country  is  no  longer  divided  into  hostile 
sections.  That  which  made  the  South  sec¬ 
tional  was  slavery  and  pride  of  caste.  Slavery, 
thank  God,  has  been  forever  abolished  and 
pride  of  caste  is  vanishing.  Yes,  sir,  the  de¬ 
cree,  sustained  by  a  majority  of  nearly  half  a 
million  of  the  voters  of  the  northern  States  and 
enduring  as  the  fiat  of  Heaven,  that  pride  of 
caste  must  disappear  from  American  politics 
has  gone  forth.  Henceforth  he  who  breathes 
the  air  of  our  country,  let  his  color  or  father- 
land  be  what  or  where  it  may,  may  by  his  own 
volition  invest  himself  with  the  attributes  of 
American  citizenship.  Everyone  born  on  the 
soil  is  a  citizen,  and  our  naturalization  laws  are 
henceforth  of  universal  application. 

I  fear  the  southern  people  after  reading  the 
Secretary’s  report  will  regard  him  rather  as  a 
man  of  sentiment  than  of  affairs.  They  may 
applaud  the  delicacy  of  his  sensibilities,  but 
while  doing  so  will  probably  wish  that  a  well- 
informed  statesman  presided  over  his  Depart¬ 
ment.  Destructive  to  our  interests  as  the 
attempt  to  provide  for  the  payment  of  out  debt 
by  extraordinary  taxes  on  this  generation  would 
be,  the  southern  people  are  less  able  than  we  to 
endure  the  mad  experiment.  Among  them  are, 
as  I  have  said,  the  widows,  orphans,  and  maimed 
soldiers  of  their  armies,  whose  poverty  is  not 
relieved  even  by  the  pittance  we  give  as  pensions 
to  the  same  classes  ;  their  industrial  system  has 
been  overthrown  and  is  not  yet  reorganized; 
their  cities  and  towns  by  their  dilapidation  tell 
how  their  trade  and  commerce  have  suffered, 
and  their  lands  to  a  great  extent  lie  waste  ;  their 
banks,  insurance  companies,  and  other  moneyed 
institutions  have  gone  into  liquidation  ;  their 
railroads  are  in  ruins  and  almost  bare  of  roll¬ 
ing-stock  ;  and  they  are  making  daily  appeals  to 
the  people  of  the  North,  whose  presence  among 
them  the  baser  sort  of  Southrons  will  not  permit, 
for  capital  with  which  to  open  and  work  mines 
of  gold,  silver,  copper,  lead,  iron,  and  coal, 
in  which  their  land  abounds.  Scourged  by  the 
results  of  their  own  folly  they  are  awakening 


10 


to  a  knowledge  of  the  value  of  their  posses¬ 
sions,  and  are  proposing  to  make  them  avail¬ 
able.  They  desire  if  they  can  obtain  the  re¬ 
quisite  capital  to  locate  the  factory  near  the 
cotton-field  and  the  forge  and  furnace  near 
the  mine  and  ore  bed. 

A  brief  extract  or  two  from  southern  papers 
of  very  recent  date  will  show  how  cruel  Mr. 
McCulloch  is  to  those  to  whom  he  wishes  to  be 
so  kind.  Says  the  Petersburg  Index: 

“The  variety  of  schemes  devised  for  the  relief  of 
that  numerous  and  unfortunate  class  of  persons  who 
are  now  laboring  under  pecuniary  embarrassment 
evinces  the  necessity,  as  well  as  the  difficulty,  of  pro¬ 
viding  an  adequate  remedy  for  the  mischief  sought 
to  be  prevented.  A  further  extension  of  the  stay 
law,  a  total  or  partial  repudiation  of  private  indebt¬ 
edness,  and  the  exemption  of  specified  property  from 
involuntary  alienation  are  some  of  the  expedients 
now  brought  forward  to  meet  the  pressing  exigencies 
of  the  occasion.” 

The  Nationalist,  Mobile,  Alabama,  says  : 

“  Reliable  planters  from  Mississippi  say  that  not 
one  half  dozen,  on  an  average,  in  each  county  in  that 
State,  can  pay  their  debts.  Targe  tracts  of  valuable 
land  are  selling  at  nominal  rates.” 

And  the  Richmond  Times  says: 

“  If  the  tide  of  immigration  continues  to  flow  by  us, 
and  we  make  no  energetic  and  intelligent  effort  to 
secure  it,  taxation  will  speedily  devour  what  little  the 
war  left,  and  a  few  years  hence  when  the  pine,  the 
persimmon,  and  the  sassafras  have  made  a  wilderness 
of  many  a  broad  and  once  fertile  field,  some  inaus¬ 
picious  day  the  tax-gatherer  or  the  sheriff  will  hang 
out  his  red  flag  over  the  ruins  of  the  old  family  man¬ 
sion,  and  then,  alas  for  the  paternal  acres,  and  the 
dear,  sacred  old  homes  of  our  boyhood!  for  every¬ 
thing,  even  the  dear  old  graveyard,  where  repose 
the  honored  dust  of  our  forefathers  and  the  bones 
of  many  a  noble  ‘soldier,’  ‘son,’  and  fair  daughter 
will  pass  into  the  hands  of  some  codfish-eating  Puri¬ 
tan  from  Boston  or  Nantucket.” 

How  incapable  tlie  people  of  North  Caro¬ 
lina  are  of  enduring  extraordinary  taxation  is 
'shown  by  reference  to  facts  which  occurred 
anterior  to  the  war  by  a  writer  in  the  Newbern 
Times  of  September  8.  After  saying  with 
truth  that  “the  old  North  State  is  inferior  to 
none  of  her  sisters  in  the  combined  advantages 
of  situation,  climate,  agricultural  and  mineral 
riches,”  he  proceeds  to  make  the  following 
exhibit : 

“In  1860 North  Carolina  ranked  as  twelfth  among 
the  States,  containing  a  population  of  992,622,  of  whom 
331,059  were  slaves.  The  free  population  are  distrib¬ 
uted  according  to  places  of  birth,  as  follows : 


Born  in  North  Carolina . 634,220 

Born  in  other  southern  States .  21,446 

Born  in  northern  States .  2,399 

Born  in  foreign  countries .  3,299 

Born  at  sea  and  not  classified .  201 


“While  North  Carolina  was  thus  receiving  from 


without  her  limits  about  twenty-seven  thousand  im¬ 
migrants,  she  sent  as  emigrants  to  other  States  no  less 
than  272,606  of  her  free-born  offspring  who  are  scat¬ 
tered  throughout  the  western  and  southwestern  States, 
of  whom  Tennessee  received  55,000,  Georgia  29,000, 
Indiana  27,000,  Alabama  23,000,  Arkansas  18,000. 

“  She  was  ninth  among  the  States  in  her  contribu¬ 
tion  to  the  population  of  the  Union ;  seventh  in  con¬ 
tributing  to  the  population  of  other  States;  behind 
all,  save  little  Delaware  and  South  Casolina,  which 
ranks  last  of  all,  in  the  reception  of  citizens  from 
other  States. 

“  Of  the  vast  foreign  immigration,  numbering  up¬ 
ward  of  four  millions,  which  has  built  up  the  manu¬ 
factures  and  the  internal  improvements  of  the  north¬ 
ern  and  western  States  she  received  only  about  three 
thousand,  standing  in  that  respect  behind  every  State 
in  the  Union  and  behind  three  of  the  Territories.” 

But  bow  capable  the  future  people  of  North 
Carolina  will  be  is  well  shown  by  the  editor  of 
the  Old  North  State,  published  at  Salisbury. 
In  an  article  entitled  “The  Future  of  North 
Carolina,”  he  says: 

“  The  questions  present  themselves,  how  is  all  this 
to  be  done,  and  can  the  Government  promote  the 
great  object  by  a  proper  policy?  We  shall  endeavor 
to  answer  these  questions  to  the  best  of  our  poor 
ability. 

“  The  abolition  of  slavery  has,  in  our  opinion, 
changed  the  destiny  of  the  State.  The  negro  cannot 
be  entirely  relied  upon  as  a  laborer,  and  he  must  be 
assisted  by  or  his  place  be  supplied  with  white  labor¬ 
ers  sooner  or  later.  These,  except  in  a  small  portion 
of  the  State,  cannot  be  profitably  employed  in  agri¬ 
cultural  pursuits  until  other  interests  are  brought 
prominently  forward  and  partially  developed.  This 
cannot  be  done  without  an  influx  of  capital  from 
abroad. 

“The  greatest  of  these  interests,  and  those  which 
we  shall  notice  on  this  occasion,  are  the  mining  and 
manufacturing  interests.  It  is  perfectly  useless  for 
us  to  speak  of  the  vast  mineral  wealth  of  North  Caro¬ 
lina;  it  is  known  to  all  the  world  to  be  inferior  to 
that  of  no  country  on  the  globe,  both  in  quantity, 
quality,  and  variety  of  minerals,  but  we  have  no 
capital  to  render  them  available. 

“And  to  the  capitalist  who  desires  to  engage  in  man¬ 
ufacturing,  no  country  in  the  world  presents  more 
inducements  than  North  Carolina.  Her  water  power 
is  unsurpassed.  As  a  general  thing  steam  is  useless  in 
the  State  for  manufacturing  purposes ;  for  the  face  of 
the  country  is  intersected  by  water  courses  such  as 
abound  in  few  other  lands.  If  we  look  at  the  map 
we  shall  see  that  there  is  a  perfect  net-work  of 
streams,  showing  that  it  is  one  of  the  best  watered 
portions  of  the  earth,  and  the  structure  of  the  country 
is  such  that  every  one  of  these  streams  can  be  made 
to  drive  machinery.  All  this  magnificent  provision 
of  nature  has  thus  far, been  permitted  to  waste,  in  a 
great  measure  at  least. 

“It  is  scarcely  necessary  to  refer  to  these  facilities 
more  in  detail.  Every  reader  knows  the  vast  capacity 
of  our  larger  rivers  for  these  purposes.  That  of  the 


11 


Roanoke,  the  Neuse,  the  Haw,  the  Deep,  the  Main 
Yadkin,  the  South  Yadkin,  the  Little  Yadkin,  the 
Catawba  and  other  rivers  of  the  State  for  driving 
machinery  is  scarcely  equaled  by  any  in  the  world, 
while  we  have  many  other  smaller  streams  of  very 
great  capacity. 

“And  when  all  this  water  power  is  turned  to  account 
for  manufacturing  purposes,  as  it  will  be  at  no  great 
distance  of  time,  when  we  have  thousands  of  furnaces 
in  full  blast  turning  the  ores  from  the  bowels  of  the 
earth  into  tho  richest  marketable  commodities,  and 
when  our  vast,  deposits  of  coal  shall  be  used  for  these 
and  other  purposes  for  which  nature  intended  them, 
what  a  country  we  will  havel  What  vast  amounts 
of  wealth  must  then  flow  into  our  laps.  Our  State 
will  then  be  dotted  over  with  the  most  flourishing 
manufacturing  towns  and  villages  and  our  now  barren 
fields  will  teem  with  the  richest  verdure. 

“This  must  necessarily  be  so.  Wo  stated  at  the 
outset  that  until  the  mining  and  manufacturing 
interests  were  at  least  partially  developed  imported 
white  labor  could  not  be  profitably  employed  in  agri¬ 
cultural  pursuits.  But  when  these  interests  become 
to  be  a  power  in  the  State  the  thing  changes.  All 
the  thousands,  if  not  hundreds  of  thousands,  of  factory 
operatives  and  miners  must  find  a  support,,  and  the 
result  will  be  that  vast  home  markets  will  be  created. 
The  soil  will  be  heavily  taxed  for  their  sustenance 
and  consequently  vast  improvements  will  be  made  in 
our  system  of  agriculture — and  nothing  needs  im¬ 
provement  more.  But  we  will  not  pursue  this  lino 
of  remark  further— we  have  presented  the  general 
outlines,  and  we  leave  it  to  the  imagination  of  our 
readers  to  fill  up  the  picture.  In  the  course  of  time 
the  farms  of  our  State  will  rival  those  of  tho  Dutch 
Pennsylvanians;  our  lands  will  become  equally  pro¬ 
ductive,  while  our  system  of  internal  improvements 
will  become  equal  to  theirs.” 

More  gladly,  sir,  than  the  people  of  the  North 
will  those  of  the  South  welcome  release  from 
every  dollar  of  taxation  from  which  sagacity 
can  exempt  them.  And  I  assure  the  Secre¬ 
tary  that  the  people  of  no  part  of  the  country 
have  shared  so  largely  as  those  of  the  South 
the  surprise  and  wonder  to  which  he  alludes. 
Mr.  McCulloch  says: 

“  We  have  but  touched  the  surface  of  our  resources; 
the  great  mines  of  our  national  wealth  are  yet  to  be 
developed.” 

This  is  specially  true  as  to  the  southern  portion 
of  our  country,  and  in  the  name  of  the  impov¬ 
erished  people  of  that  section  I  ask,  is  it  well 
to  tax  a  generation  the  surface  of  whose  re¬ 
sources  has  not  been  touched  by  the  transmut¬ 
ing  hand  of  labor,  and  the  mines  of  whose 
wealth  are  yet  to  be  developed,  in  order  to  pay 
the  principal  of  a  mortgage  the  holder  of  which 
neither  needs  nor  desires  his  money  ?  and  would 
not  wisdom  or  state  craft  suggest  the  propriety 
of  enabling  the  owners  of  these  mines  of  wealth 
to  accumulate  the  capital  with  which  to  work 
them  and  by  the  magic  touch  of  labor  to  con¬ 
vert  them  into  current  gold?  The  taxing  pro¬ 


cess  maintains  our  exhausting  dependence  on 
foreign  nations,  while  the  developing  process 
would  make  us  as  free  commercially  as  we  are 
politically  5  and  enable  us,  by  our  example 
of  liberal  wages  and  freedom  from  their  ex¬ 
hausting  hours  of  toil,  to  influence  the  com¬ 
mercial  and  manufacturing  usages  of  European 
States,  as  our  political  example  is  influencing 
their  political  and  social  institutions. 

The  Secretary,  however,  has  other  prescrip¬ 
tions  than  that  of  excessive  taxation  by  which 
to  restore  the  country.  In  his  opening  para¬ 
graphs  he  says : 

“With  proper  economy  in  all  the  Departments  of 
the  Government,  the  debt  can  be  paid  by  the  genera¬ 
tion  that  created  it,  if  wise  and  equal  revenue  laws 
shall  be  enacted  and  continued  by  Congress,  and 
these  laws  are  faithfully  enforced  by  the  officers 
charged  with  their  execution.” 

Again,  he  tells  us  that  he  11  has  mainly 
directed  his  attention  to  measures  looking  to 
an  increase  of  efficiency  in  the  collection  of 
revenues,  to  the  conversion  of  interest-bearing 
notes  into  five-twenty  bonds,  and  to  a  reduc¬ 
tion  of  the* public  debt.”  Efficiency  in  the 
collection  of  revenues,  forsooth !  u  The  faith-' 
ful  enforcement  of  laws  by  the  officers  charged 
with  their  execution  !  ’  ’  These  are  brave  words 
to  fall  from  the  lips  of  one  whose  faithless  ex¬ 
ercise  of  official  functions  in  this  very  matter 
has  during  the  past  year  cost  the  Government 
more  than  $50,000,000.  Brave  words,  indeed, 
are  these  from  one  who  in  a  wicked  attempt 
to  subvert  the  popular  will  by  the  corrupt  use 
of  official  patronage  has  removed  hundreds 
of  well-tried,  capable,  and  experienced  offi¬ 
cers  of  the  revenue  and  customs  departments 
and  substituted  for  them  men  deficient  alike 
in  capacity,  experience,  and  character.  There 
is  not  a  congressional  district  in  the  country 
whose  people  are  not  grieving  over  the  fact 
that  the  Secretary  of  the  Treasury,  who  em¬ 
bodies  in  his  report  reiterations  of  these  fine 
phrases,  has  wantonly  and  wickedly  aggravated 
the  onerous  taxation  under  which  they  groan. 
Let  who  will  speak  of  the  necessity  of  a  faith¬ 
ful  administration  and  due  enforcement  of  the 
revenue  laws,  for  which  every  patriot  will  pray, 
becoming  modesty  ■would  constrain  the  Secre¬ 
tary  of  the  Treasury  to  avoid  the  topic.  This 
is  a  matter  on  which  Congress  should  take 
early  action,  and  if  it  means  that  the  customs 
and  internal  revenue  laws  shall  be  faithfully 
and  impartially  enforced  it  must  see  that  an¬ 
other  than  the  author  of  the  report  I  am  con¬ 
sidering  shall  have  the  selection  of  officers  for 
their  enforcement. 

Some  of  the  Secretary’s  suggestions  are  em¬ 
bodied  in  distinct — no,  not  in  distinct,  but  in 
numerical  propositions.  To  one  of  these  I 
invite  the  attention  of  the  committee.  It  is  as 
follows: 

“•2.  That  the  duties  upon  imported  commodities 


12 


should  correspond  and  harmonize  with  the  taxes  upon 
home  productions;  and  that  these  duties  should  not 
be  so  high  as  to  bo  prohibitory,  nor  to  build  up  home 
monopolies,  nor  to  prevent  that  free  exchange  of 
commodities  which  is  the  life  of  commerce.  Nor,  on 
the  other  hand,  should  they  be  so  low  as  to  seriously 
impair  the  revenues,  nor  to  subject  the  home  manu¬ 
facturers,  burdened  with  heavy  internal  taxes,  to  a 
competition  with  cheaper  labor  and  larger  capital 
which  they  may  be  unable  to  sustain.” 

“There’s  wisdom  for  you!”  I  venture  to 
assert  that  Jack  Bunsby  throughout  his  intel¬ 
lectual  career  never  uttered  a  more  character¬ 
istic  proposition  than  that;  and  all  will  agree 
that  since  the  celebrated  Kane  letter  of  James 
K.  Polk  our  political  literature  has  embodied 
no  utterance  more  shrewdly  Delphic. 

This  ingeniously  inexpressive  proposition 
does  not  embody  the  Secretary’s  only  allusion 
to  “home  monopolies.”  He  seems  to  hold 
them  in  special  dread ;  and  it  is  to  be  deeply 
regretted  that  he  has  not  indicated  the  argu¬ 
ment  by  which  his  apprehensions  are  sustained, 
as  they  are  not  to  be  found  in  the  works  of  the 
disciples  of  any  school  of  political  economy  or 
social  science. 

The  teachers  of  free  trade  do  not  agree  with 
him  in  believing  that  high  duties  “build  up 
home  monopolies.”  They  assert  that  protec¬ 
tion  secures  undue  profits  to  certain  branches 
of  production  and  tempts  capitalists  to  ruin 
themselves  by  so  overdoing  the  business  as 
to  glut  the  market  and  have  to  sell  their 
goods  at  small  profits  or  at  a  loss.  Their 
theory  proceeds  upon  the  want  of  judgment 
in  capitalists  and  business  men — but  by  assert¬ 
ing  that  high  duties  beget  undue  domestic 
competition  denies  that  they  promote  local 
monopolies. 

Nor  does  Mr.  McCulloch  agree  with  the 
school  of  protectionists,  for  they  say  that 
assured  protection  against  unequal  competition 
gives  capitalists  confidence  and  induces  them 
to  open  mines  and  build  furnaces,  forges,  and 
factories,  whereby  constant  employment  and 
ample  wages  are  secured  to  the  otherwise  idle 
people  of  the  country.  This  theory  proceeds 
on  the  assumption  that  the  American  manu¬ 
facturer  is  competent  to  measure  the  contin¬ 
gencies  of  our  own  markets  and  of  the  natural 
course  of  foreign  trade,  but  is  not  competent 
to  resist  the  gigantic  efforts  which  were  corm 
mended  by  Lord  Brougham,  and  one  of  which 
is  now  making  by  the  Croesus-like  capitalists 
of  England  “  to  stifle  in  the  cradle  those  rising 
manufactures  in  the  United  States  which  the 
war  has  forced  into  existence.” 

Our  present  condition  resembles  very  closely 
that  of  the  States  of  Europe  at  the  close  of 
Napoleon’s  wars,  and  the  following  passage 
from  the  admirable  address  of  John  L.  Hayes, 
Esq.,  entitled  “The  Fleece  and  the  Loom,” 
embodies  illustrations  of  fixed  laws  applicable 


enough  to  dispel  even  the  Secretary’s  dread  of 
“home  monopolies:” 

“  What  would  have  been  the  future  industrial  con¬ 
dition  of  continental  Europe  if  at  the  time  when 
peace  restored  the  nations  to  labor  the  textile  manu¬ 
factures  had  been  left  to  their  own  free  course  and 
no  legislation  had  intervened  to  regulate  their  pro¬ 
gress?  Can  there  be  anydoubtthat  they  would  have 
become  the  exclusive  occupation  of  England?  Alone 
in  the  possession  of  steam  power  and  machinery; 
alone  provided  with  ships  and  means  of  transport; 
alone  endowed,  through  her  staple  legislation,  with 
capital  to  vivify  her  natural  wealth,  she  had  abso¬ 
lute  command  of  the  markets  of  the  Continent.  The 
question  was  presented  to  the  continental  nations 
whether  they  should  accept  the  cheap  tissues  of  Eng¬ 
land,  or  at  some  sacrifices  repel  them,  to  appropriate 
to  themselves  the  labor  and  profit  of  their  production. 
The  latter  course  was  successively  adopted,  with  some 
modifications,  by  each  of  the  continental  nations; 
and  with  what  results  to  their  own  wealth  and  the 
industrial  progress  and  comfort  of  the  world?  In¬ 
stead  of  a  single  workshop  Europe  has  the  workshops 
of  France,  Russia,  Austria,  Prussia,  Belgium,  Swe¬ 
den,  Denmark,  Spain,  each  clothing  its  own  peoplo 
with  substantial  fabrics;  each  developing  its  own 
creative  genius  and  peculiar  resources;  each  con¬ 
tributing  to  substitute  the  excellence  of  competition 
for  the  mediocrity  of  monopoly;  each  adding  to  the 
progress  of  the  arts  and  the  wealth  and  comfort  of 
mankind.” 

The  fifth  of  the  Secretary’s  propositions  is 
“the  rehabilitation  of  the  States  recently  in 
insurrection.”  Referring  to  the  conquered  ter¬ 
ritories,  which  notwithstanding  the  President’s 
usurpations  await  the  action  of  the  lawr-making 
power,  Mr.  McCulloch  says : 

“  Embracing  as  they  do  one  third  part  of  the  richest 
lands  of  the  country,  and  producing  articles  of  great 
value  for  home  use  and  for  exportation  to  other 
countries,  their  position  with  regard  to  the  General 
Government  cannot  remain  unsettled,  and  their  in¬ 
dustrial  pursuits  cannot  continue  to  be  seriously  dis¬ 
turbed,  without  causing  such  a  diminution  of  the 
production  of  their  great  staples  as  must  necessarily 
affect  our  revenues,  and  render  still  more  unsatis¬ 
factory  than  they  now  are  our  trade  relations  with 
Europe.”  *  *  *  *  “There  will  be  no 

real  prosperity  in  these  States,  and  consequently  no 
real  prosperity  in  one  third  part  of  the  United  States, 
until  all  possess  again  equal  privileges  under  the 
Constitution.” 

If  it  be  true,  as  it  undoubtedly  is,  that  “one 
third  part  of  the  richest  lands  of  the  country” 
are  by  reason  of  temporary  causes  not  pro¬ 
ducing  “articles  of  great  value  for  home  use 
and  for  exportation  to  other  countries”  would 
it  not  seem  to  suggest  the  idea  that  this  un¬ 
happy  state  of  affairs  should  be  permitted  to 
pass  away  and  these  lands  be  made  product¬ 
ive  before  they  should  be  burdened  with  taxes 
not  demanded  by  imperious  necessity?  And 


13 


whether  before  these  lands  shall  be  able  to  bear 
taxation  for  that  purpose  the  people  of  the 
North,  whose  sacrifices  during  the  war  saved 
the  integrity  of  the  Union,  should  be  called 
upon  to  extinguish  the  debt  created  by  the 
crimes  of  the  possessors  of  this  broad  and  rich 
territory?  The  people  of  the  northern  States 
have  certainly  arrived  at  this  conclusion,  and  I 
have  shown  that  schooled  by  suffering  the  peo¬ 
ple  of  the  South,  while  antagonizing  them  on 
many  points,  agree  with  them  on  this. 

Pursuing  this  branch  of  his  subject,  Mr. 
McCulloch  asks,  “  Can  the  nation  be  regarded 
as  in  a  healthy  condition  when  the  industry  of 
so  large  a  portion  of  it  is  deranged  ?’  ’  And  the 
people,  North  and  South,  answer  “No;  and 
in  our  enfeebled  condition  we  pray  you  not  to 
rob  us  of  our  working  capital  in  order  to  ex¬ 
tinguish  a  debt  which  was  contracted  for  the 
benefit  of  mankind  and  future  ages.” 

lie  asks  again,  “And  can  the  labor  question 
at  the  South  be  settled  as  long  as  the  political 
status  of  the  South  is  unsettled?”  And  the 
country  answers  “yee,  there  is  no  inseparable 
connection  between  the  labor  question  and  the 
political  status  of  the  conquered  territories;” 
and  adds  that  the  “political  status”  of  the 
South  cannot  be  settled  until  its  rebellious 
leaders  discover  that  the  loyal  people  of  the 
country  are  able  to  defend  its  institutions 
against  the  usurpations  of  Andrew  Johnson, 
accept  the  constitutional  amendments  already 
adopted  and  which  are  in  process  of  adoption 
by  three  fourths  of  the  States  which  now  con¬ 
stitute  the  Union,  and  submit  to  Congress  con¬ 
stitutions  republican  in  form  upon  which  the 
people  shall  have  set  the  seal  of  their  approval. 
The  people  of  the  loyal  North  cannot  restore 
those  of  the  conquered  territories  to  their 
“political  status.”  We  can  only  consent  to 
their  restoration  when  they  shall  be  willing 
that  it  shall  take  place  on  terms  which  will 
render  the  future  peace  of  the  country  secure, 
and  for  this  we  are  and  have  been  ready.  The 
leaders  of  the  South  not  we  are  the  dog  in  the 
manger.  It  is  they  who  by  refusing  to  abandon 
the  dogmas  that  evoked  the  war  and  the  oli¬ 
garchic  institutions  that  sustained  it  resist  the 
influx  of  the  tide  of  immigration  that  would 
fertilize  their  lands  and  republicanize  their 
institutions. 

The  imminent  want  of  the  people  of  the  South 
is  not  ‘ 1  political  status.  ’  ’  That  would  not  ena¬ 
ble  them  to  settle  the  “labor  question.”  What 
they  want  is  capital  and  currency  and  a  will¬ 
ingness  to  permit  loyal  men,  whether  white  or 
black,  native  or  foreign,  to  dwell  among  them, 
and  by  their  labor  quicken  into  commercial 
value  the  boundless  and  varied  natural  wealth 
of  the  land  they  occupy,  but  which  they  will 
neither  work  themselves  nor  permit  others  to 
work  in  peace  and  safetjn  When  in  obedience 
to  a  healthy  national  sentiment  or  the  prompt¬ 
ings  of  their  own  interests  they  will  make  capi¬ 


tal  secure,  opinion  free,  and  give  peaceful  scope 
to  enterprise  within  their  borders,  the  immense 
deposits  which  profitless  to  their  owners  now  lie 
in  bank,  because  under  the  hammering  process 
of  the  Secretary  of  the  Treasury  judicious  men 
are  afraid  to  embark  in  new  enterprises  will  be 
transferred  to  the  South  to  develop  her  pro¬ 
ductive  and  taxable  power,  and  make  her  pop¬ 
ulous  and  prosperous  beyond  the  wildest  dream 
of  the  visionary  theorists  who  involved  her  in  a 
war  as  causeless  as  it  was  disastrous. 

Mr.  Chairman,  time  will  not  permit  me  to 
answer  all  the  Secretary’s  interrogatories  or 
examine  each  of  his  numerical  propositions. 

But  his  friends  may  complain  that  I  have 
not  alluded  to  that  which  they  regard  as  his 
chief  specific.  It  is  set  forth  in  the  second 
of  another  series  of  propositions  as  follows: 
“  a  curtailment  of  the  currency  to  the  amount 
required  by  legitimate  and  healthful  trade.” 
On  this  point,  though  not  condescending  to 
indicate  what  amount  of  currency  is  in  his 
judgment  required  by  “legitimate  and  health¬ 
ful  trade”  in  the  present  abnormal'  condition 
of  the  country,  the  Secretary  is  peculiarly 
coherent  and  luminous.  He  is  clearly  a  dis¬ 
ciple  of  Dr.  Sangrado.  He  recognizes  the 
circulating  medium  as  the  life-blood  of  com¬ 
merce,  and  as  Sangrado  attempted  to  restore 
his  patients  by  withdrawing  blood  and  inject¬ 
ing  warm  water  into  their  veins  he  proposes  to 
assist  extraordinary  taxation  in  the  work  of 
rehabilitating  the  southern  States,  whose  great 
want  is  currency  and  working  capital,  and  in 
invigorating  the  languishing  interests  of  the 
North  by  contracting  the  currency,  and  especi¬ 
ally  by  withdrawing  that  portion  which  is  of 
equal  and  unquestioned  value  in  every  part  of 
the  country — the  United  States  notes,  com¬ 
monly  called  “greenbacks.”  He  says: 

“He  regards  a  redundant  legal-tender  currency  as 
the  prime  cause  of  our  financial  difficulties  and  a 
curtailment  thereof  indispensable  to  an  increase  of 
labor  and  a  reduction  of  prices  to  an  augmentation 
of  exports  and  a  diminution  of  imports,  which  alone 
will  place  the  trade  between  the  United  States  and 
other  nations  on  an  equal  and  satisfactory  footing.” 

And  that — 

“  He  is  of  opinion  that  the  national  banks  should 
be  sustained,  and  that  the  paper  circulation  of  the 
country  should  be  reduced,  not  by  compelling  them 
to  retire  their  notes,  but  by  the  withdrawal  of  the 
United  States  notes.” 

Mr.  Chairman,  had  I  been  properly  in¬ 
structed  in  the  mysteries  of  “  Injeany  bank¬ 
in’  ”  I  might  be  able  to  comprehend  and  ap¬ 
preciate  these  suggestions ;  but  in  the  blind¬ 
ness  of  my  ignorance  I  cannot  see  what  there 
is  to  commend  his  theory  to  the  Finance  Min¬ 
ister  of  our  country.  The  greenbacks  are,  it 
is  true,  part  of  our  debt,  and  must  therefore  at 
some  day  be  redeemed  ;  but  they  are  the  only 


14 


part  of  our  immense  debt  which  bears  no  inter¬ 
est;  and  while  there  are  outstanding,  as  the 
Secretary’s  statement  of  December  1,  1866, 
shows,  $147,387,140  of  compound-interestnotes 
which  are  currency  and  used  as  such  by  the  na¬ 
tional  banks,  and  $699,933,750  of  three-years’ 
notes  bearing  seven  and  three  tenths  per  cent, 
interest,  all  of  which  were  purchased  in  a 
greatly  depreciated  currency,  I  cannot  compre¬ 
hend  the  philosophy  which  proposes  to  let  the 
interest  on  these  run,-  while  absorbing  a  non- 
interest-bearing  loan  which  the  people  cherish 
as  furnishing  the  best  currency  except  specie 
they  have  ever  had. 

The  experiment  if  attempted  as  a  means  of 
hastening  specie  payments  will  prove  a  failure, 
but  not  a  harmless  one.  It  will  be  fatal  to  the 
prospects  of  a  majority  of  the  business  men  of 
this  generation  and  strip  the  frugal  laboring 
people  of  the  country  of  the  small  but  hard- 
earned  sums  they  have  deposited  in  savings 
banks  or  invested  in  Government  securities.  It 
will  make  money  scarce  and  employment  un¬ 
certain.  Its  object  is  to  reduce  the  amount  of 
that  which  in  every  part  of  our  country  and  for 
the  hundreds  of  thousands  of  millions  of  dol¬ 
lars  of  domestic  trade  is  money  and  to  increase 
its  purchasing  power;  and  by  unsettling  values 
it  will  paralyze  trade,  suspend  production,  and 
deprive  industry  of  employment.  It  will  make 
the  money  of  the  rich  man  more  valuable  and 
deprive  the  poor  man  of  his  entire  capital, 
the  value  of  his  labor,  by  depriving  him  of  em¬ 
ployment.  Its  first  effect  will  be  to  increase 
the  rate  of  interest  and  diminish  the  rate  of 
wages,  and  its  final  effect  wide-spread  bank¬ 
ruptcy  and  a  more  protracted  suspension 
of  specie  payments.  Anxious  as  the  people 
are  to  relieve  the  country  of  the  evils  entailed 
upon  it  by  the  war,  and  willing  as  they  have 
proven  themselves  to  be  to  endure  any  priva¬ 
tions  or  make  any  sacrifices  required  by  the 
exigencies  of  the  country,  they  will  not  consent 
to  an  experiment  involving  such  terrible  conse 
quences  for  the  purpose  of  paying  the  “Inge- 
any”  and  other  banks  which  hold  and  use  as 
part  of  their  reserve  our  compound-interest 
notes  two  dollars  for  every  one  they  invested 
in  this  interest-bearing  portion  of  our  “  lawful 
money.”  Much  as  banks,  bankers,  and  spec¬ 
ulators  in  Government  securities  may  approve 
this  policy,  the  people  earnestly  and  indignantly 
protest  against  it. 

Does  Mr.  McCulloch  forget  that  the  com¬ 
pound-interest  bearing  notes  are  part  of  the 
“legal  tender  currency”  against  which  lie 
declaims,  and  that  by  absorbing  them  he  will 
be  contracting  the  currency  and  reducing  the 
volume  of  interest  that  is  compounding  against 
the  Government?  The  banks  are  required, 
those  of  certain  cities,  to  maintain  a  reserve  of 
“lawful  money”  equal  to  twenty-five  percent, 
of  their  circulation  and  deposits,  and  the  bal¬ 
ance  of  them  a  like  reserve  of  fifteen  per  cent., 


and  as  he  well  knows  they  have  absorbed  and 
hold  not  greenbacks,  but  compound-interest 
notes  as  that  reserve.  He  should  keep  his 
non-interest-bearing  notes  afloat  till  these  are 
redeemed.  They  will  mature  in  1867  and 
1868,  and  by  redeeming  them  he  will  contract 
the  currency  at  the  rate  of  $6,000,000  per 
month  and  relieve  the  Government  of  one  of 
its  most  exhausting  interest  accounts.  By 
this  process  he  will  keep  five-twenties  above 
par  and  promote  the  conversion  into  them  of 
seven-thirties,  and  reduce  the  interest  on  that 
portion  of  our  debt  from  seven  and  three-tenths 
to  six  per  cent.  But  by  his  process  of  contract¬ 
ing  the  volume  of  greenbacks  and  imposing 
extraordinary  taxes  on  our  industry  he  will 
delay  the  redemption  of  the  one  and  the  con¬ 
version  of  the  other,  and  may  deprive  us  of  the 
ability  to  redeem  either  the  seven-thirties  or 
compound-interest  notes  at  maturity. 

The  people  do  not  regard  greenbacks  and  the 
notes  of  national  banks  with  equal  favor,  but 
have  a  well-grounded  preference  for  the  former. 
They  know  that  the  ultimate  redemption  of  the 
bank  notes  is  secured  by  deposits  of  Govern¬ 
ment  securities  and  the  maintenance  of  a  re¬ 
serve  of  greenbacks ;  and  as  the  substance  is 
more  solid  than  its  shadow,  they  prefer  that 
which  secures  to  that  which  requires  to  be 
secured.  Several  national  banks  have  failed  ; 
and  though  the  ultimate  redemption  of  the 
notes  was  secured,  there  was  no  provision  for 
their  immediate  redemption,  and  the  laboring 
people  who  held  them  had  to  sell  them  at  great 
loss  to  “Ingeany”  or  other  bankers,  wrho 
could  afford  to  hold  them  till  the  Government 
was  ready  to  redeem  them.  Having  sustained 
no  such  losses  by  greenbacks  they  naturally 
prefer  them.  Adequate  as  these  reasons  are 
for  the  popular  preference,  there  are  others 
which  I  will  state,  in  the  language  of  the  Sec¬ 
retary’s  report. 

Mr.  HOOPER,  of  Massachusetts.  If  I 
understand  the  gentleman  from  Pennsylvania, 
he  asserts  that  when  national  banks  fail  their 
notes  cease  to  circulate.  Has  the  gentleman 
ever  heard  of  any  such  instance?  The  Govern¬ 
ment  is  still  responsible  when  the  bank  fails, 
and  these  notes  are  redeemed  when  presented 
at  the  Treasury.  I  understand  they  circulate, 
therefore,  as  well  after  as  before  the  suspen¬ 
sion  of  the  bank.  It  may  be  remembered  that 
the  Treasurer  of  the  United  States  Avas  recently 
somewhat  criticised  by  the  press  for  his  state¬ 
ment  that  the  national  bank  notes  were  better 
after  the  bank  failed  than  before. 

Mr.  KELLEY.  I  have  recognized  the  ulti¬ 
mate  responsibility  of  the  Government  for 
them,  but  I  know  that  traders,  and  traders  in 
money  especially,  take  advantage  of  all  con¬ 
tingencies,  and  I  have  known  laboring  men 
to  sell  to  brokers  the  notes  of  a  broken  na¬ 
tional  bank  at  considerable  loss.  The  an¬ 
nouncement  that  a  bank  has  failed  depreciates 


15 


the  notes  in  the  market,  for  the  people,  and 
especially  laboring  people,  arenotas  familiaras 
the  gentleman  from  Massachusetts  with  all  the 
minute  provisions  of  the  law  by  which  the  ulti¬ 
mate  redemption  of  these  notes  is  secured; 
and  when  a  bank  fails  those  poor  people,  who 
cannot  carry  them  to  the  Treasury  for  redemp¬ 
tion,  are  compelled  to  sell  them  at  a  heavy  loss. 
But,  as  I  was  proceeding  to  show,  the  Secre¬ 
tary  of  the  Treasury  more  than  sustains  my 
position  on  this  point,  for  he  deliberately  ar¬ 
gues  that  legislation  is  required  “to  make  them 
throughout  the  United  States  a  par  circulation.  ’ ’ 
He  says: 

“The  solvency  of  the  notes  of  national  banks  is 
secured  by  a  deposit  of  bonds  with  the  Treasurer  at 
Washington  ;  but  as  the  banks  are  scattered  through¬ 
out  the  country,  and  many  of  them  are  in  places  dif¬ 
ficult  of  access,  a  redemption  of  their  notes  at  their 
respective  counters  is  not  all  that  is  required  to  make 
them  throughout  the  United  States  a  par  circulation. 
It  is  true  that  the  notes  of  all  national  banks  are 
receivable  for  all  public  dues,  except  duties  upon 
imports,  and  must  be  paid  by  the  Treasurer  in  case 
the  banks  which  issued  are  unable  to  redeem  them  ; 
but  it  will  not  be  claimed  that  the  notes  of  banks, 
although  perfectly  solvent,  but  situated  in  interior 
towns,  are  practically  as  valuable  as  the  notes  of 
banks  in  the  sea-board  cities.” 

These  depreciatory  remarks  are  not  appli¬ 
cable  to  greenbacks.  They  are  of  equal  value 
throughout  the  country,  and  the  people  cherish 
them  for  this  reason  more  than  from  the  fact 
that  they  are  the  evidence  of  a  patriotic  loan 
made  by  the  people  to  the  Government  with¬ 
out  interest.  Had  Mr.  McCulloch  suggested 
that  the  national  bank  notes,  for  holding  bonds 
to  secure  which  we  pay  the  banks  $18,000,000 
per  annum,  should  be  supplanted  by  green¬ 
backs,  and  that  a  sum  equal  to  the  interest  on 
the  bonds  should  be  applied  to  the  creation  of 
a  sinking  fund  for  the  redemption  of  the  national 
debt,  the  people  would  have  applauded  his  wis¬ 
dom  and  patriotism,  and  not  questioned  his 
motives  as  they  are  now  constrained  to. 

Had  such  been  the  Secretary’s  suggestion  he 
might  have  omitted  this  one  of  his  propositions, 
namely,  to  compel  “the  national  banks  to 
redeem  their  notes  at  the  Atlantic  cities,  or, 
what  would  be  better,  at  a  single  city,”  which, 
in  plain  language,  is  a  recommendation  that  we 
increase  the  power  and  profits  of  the  banks  of 
New  York  by  compelling  every  national  bank 
outside  of  that  city  to  deposit  a  portion  of  its 
funds  with  them.  The  gambling  tendencies 
of  the  New  York  speculators  in  stocks  and 
provisions  need  no  such  stimulant  as  this ; 
and  recent  experience  has  shown  that  leading 
banks  of  that  city  are  managed  more  recklessly 
than  any  others  in  the  country,  and  would 
therefore  be  an  unsafe  depository  for  so  large, 
a  trust.  Less  than  a  month  ago  the  Secretary 
tested  their  management  and  produced  a  per¬ 


turbation  in  prices  throughout  the  country  by 
which  fortunes  were  lost  and  won  by  calling 
upon  them  for  a  small  portion  of  the  Govern¬ 
ment  deposits,  which  were  mistakenly  supposed 
to  be  represented  by  a  reserve  of  greenbacks 
in  their  vaults.  He  has  not  given  the  facts  to 
the  country,  but  it  is  known  in  well-informed 
circles  that  some  of  them  were  compelled  to  ask 
for  a  “  brief  extension”  because  they  were  un¬ 
able  to  pay  the  checks  of  a  depositor.  Prac¬ 
tical  men  may  therefore  be  excused  for  speak¬ 
ing  of  the  proposal  of  such  remedies  as  char¬ 
latanism. 

Mr.  Chairman,  as  I  have  said,  the  Secretary 
has  not  ventured  to  indicate  what,  in  his  judg¬ 
ment,  is  the  amount  of  currency  “required  by 
legitimate  and  healthful  trade”  in  the  present 
condition  of  the  country.  That  condition  is 
abnormal,  though  not  entirely  peculiar,  and 
certainly  not  unprecedented.  By  unwise  and 
unpatriotic  legislation,  which  was  dictated  by 
the  magnates  of  the  South,  millions  of  our 
poor  people  were  doomed  to  the  simplest  and 
least  remunerative  forms  of  agricultural  labor, 
or  to  enforced  idleness,  in  which  they  were 
tending  to  barbarism  ;  while  our  raw  materials 
were  being  wrought  into  fabrics  for  our  use 
in  the  workshops  of  transatlantic  nations,  and 
we  had  thus  been  drained  of  specie  and  had 
become  largely  a  debtor  nation  before  the 
war  begun.  Those  same  magnates  plunged  us 
into  a  war  of  unprecedented  proportions,  which 
we  were  unable  to  maintain  with  a  specie  or 
convertible  currency.  In  the  hour  of  our  need 
we  discerned  the  fact  that  ours  is  one  of  the 
two  countries  to  which,  in  the  language  of 
Gortschakoff,  the  enlightened  prince  who  is 
guiding  the  destinies  of  the  other,  “  God  has 
given  such  conditions  of  existence  that  their 
grand  internal  life  is  enough  for  them,”  and 
determined  that  until  the  war  and  its  conse¬ 
quences  should  have  passed  away  we  would  give 
the  world  an  example  of  our  ability  and  self- 
reliance,  and  use  a  currency  based,  not  on  the 
international  standard,  gold  and  silver,  but  on 
our  faith  in  the  resources  of  our  country  and 
the  integrity  of  its  Government.  We  thus  fur¬ 
nished  the  Government  $3,000,000,000  with 
which  to  create,  arm,  feed,  clothe,  and  pay  our 
Army  and  Navy. 

How  this  prompt  supply  of  money  quickened 
industry  and  developed  the  productive  power 
of  the  country  I  need  not  pause  to  say.  1  will,  , 
however,  remind  the  committee  that  though  it 
was  “irredeemable  legal-tender  currency,”  it 
restored  the  credit  of  the  nation,  which  had 
been  unable  to  borrow  $5,000,000  at  twelve  per 
cent.,  and  lifted  the  people  from  the  bank¬ 
ruptcy  of  1857  to  a  degree  of  prosperity  un¬ 
equaled  in  our  history.  From  1857  to  1861 
the  rate  of  interest  was  high  and  that  of  wages 
low,  and  neither  capital  nor  labor  could  find 
profitable  and  permanent  employment.  But 
with  a  safe,  though  perhaps  somewhat  redun- 


16 


dant,  currency,  by  the  use  of  which  our  people 
were  compelled  to  look  to  our  own  workshops 
for  supplies,  prosperity,  in  the  midst  of  war, 
succeeded  the  adversity  of  contracted  and  stag¬ 
nant  peace  with  magic  speed.  And  if  \ve  now 
adopt  a  tariff  law  that  will  protect  our  industry 
as  faithfully  as  did  the  difference  between  our 
paper  and  gold,  in  which  we  required  the 
duties  on  foreign  imports  to  be  paid  during  the 
war,  wTe  will  soon  discover  that  there  is  ample 
and  profitable  employment  for  all  the  currency 
authorized  by  law ;  and  that  if  we  resolutely 
refuse  to  increase  its  volume  it  will  approxi¬ 
mate  the  standard  of  convertibility  more  rap¬ 
idly  by  the  development  of  the  productive 
power  of  the  country  and  the  diversification 
of  employment  for  the  people  than  it  can  by 
the  process  of  contraction  at  any  rate.  Pro¬ 
tection  and  development  will  insure  a  prosperous 
future  ;  but  rapid  contraction  will  reproduce  the 
stagnation,  bankruptcy,  and  suffering  of  1837 
and  1857. 

The  question  presented  to  the  mind  of  prac¬ 
tical  statesmen  is  not  what  would  be  the  best 
currency  if  we  were  founding  a  new  community, 
or  how  far  we  might  with  advantage  add  paper 
to  a  purely  metallic  currency,  but  is,  what  under 
existing  conditions  do  the  true  interest  of  the 
country  require.  And  on  this  question  I  again 
take  issue  with  the  Secretary  of  the  Treasury 
and  deny  that  the  country  will  find  in  a  rapid 
or  material  contraction  of  its  currency,  or  in 
extraordinary  taxation,  a  remedy  for  any  of 
the  evils  that  afflict  it.  If,  as  some  of  his 
friends  have  done,  the  Secretary  should  point 
me  to  the  high  prices  which  many  articles  com¬ 
mand,  or  to  the  immense  deposits  which,  unpro¬ 
ductive  to  their  owners,  are  enhancing  the  pres¬ 
ent  profits  and  future  liabilities  of  the  banks,  I 
will  reply  to  him,  as  I  have  to  them,  that  these 
are  not  proofs  of  the  redundancy  of  the  cur¬ 
rency,  but  of  his  mistaken  policy  and  inveterate 
mismanagement. 

Though  the  use  of  those  immense  deposits  is 
lost  to  their  cautious  proprietors,  the  money 
does  not  lie  idle  in  the  vaults  of  banks;  it  is 
lent  on  call  in  large  sums  to  adventurers,  who 
by  its  use  enhance  the  price  of  such  commod¬ 
ities  as  they  can  monopolize  or  control.  Those 
who  could  make  their  own  capital  productive 
are  afraid  to  use  it,  and  reckless  gamblers  riot 
in  its  use.  Yes,  sir,  the  Secretary’s  policy  is 
calculated  to  diminish  production  and  stimu¬ 
late  speculation,  which  symptoms  have  been 
the  twin  precursors  of  all  our  commercial 
crises  and  eras  of  bankruptcy.  Under  his  fatal 
policy — 

“The  native  hue  of  resolution 

Is  sicklied  o’er  with  the  pale  cast  of  thought; 

And  enterprises  of  great  pith  and  moment, 

With  this  regard,  their  currents  turn  awry, 

And  lose  the  name  of  action.” 

The  sagacious  but  prudent  owners  of  those 


deposits  grieve  that  the  money  with  which  they 
would  gladly  open  coal  mines  and  ore  banks  and 
build  forges  and  furnaces  and  factories  and  im¬ 
port  skilled  laborers  from  Europe  to  increase 
and  diversify  our  productions,  enlarge  our  home 
market,  and  swell  the  revenues  of  the  Govern¬ 
ment,  lies  dead  and  profitless  to  them.  Th°y 
justly  charge  their  loss  and  that  of  the  cou.i- 
try  to  Mr.  McCulloch,  who,  from  his  Fort 
Wayne  speech  forward,  has  lost  no  opportu¬ 
nity,  official  or  unofficial,  to  warn  the  energetic 
men  of  the  country  against  embarking  in  any 
new  enterprises  or  accumulating  any  consid¬ 
erable  stock  of  goods,  or  otherwise  enlarging 
their  arrangements  for  the  future  ;  and  who,  in 
his  last  utterance — the  report  which  I  am  con¬ 
sidering — notifies  them  of  the  near  approach 
of  the  fatal  collapse  by  assuring  them  that 
though  the  banks  are  without  specie,  the  bal 
ance  of  trade  is  vastly  against  us  and  the  Treas¬ 
ury  has  nearly  one  billion  dollars  of  temporary 
loan  to  provide  for,  he  is  “confident  that  specie 
payments  may  be  resumed  by  the  time  our  in¬ 
terest-bearing  notes  are  retired,  which  must  be 
done  in  less  than  two  years,  and  probably  will 
be  in  a  much  shorter  period.”  ' 

What  the  effect  of  an  effort  at  early  resump¬ 
tion  under  such  circumstances  would  be  every 
experienced  business  man  in  the  country 
knows.  They  know  that  it  can  by  any  possi¬ 
bility  be  but  a  spasmodic  movement,  which 
will  literally  vomit  forth  from  the  country  the 
little  gold  and  silver  left  in  it.  They  know 
that  it  will  bankrupt  individuals,  corporations, 
States,  and,  alas,  it  may  be,  the  national  Gov¬ 
ernment  itself.  The  avowed  object  of  the  Sec¬ 
retary  in  contracting  the  currency  is  to  increase 
the  purchasing  power  of  money;  and  they 
know  that  the  rapid  decline  in  prices  pending 
this  mad  experiment  will  sweep  away  the  gar¬ 
nered  capital  of  those  manufacturers  whose 
stock  largely  exceeds  their  working  capital, 
exclusive  of  buildings  and  machinery,  that 
mechanical  and  manufacturing  production 
must  be  wholly  suspended  till  the  blighting 
tornado  shall  have  spent  its  power,  and  that 
while  it  rages  the  receipts  of  the  Internal  Rev¬ 
enue  Bureau  must  fall  to  zero. 

But,  sir,  if  by  thus  returning  to  the  wretched¬ 
ness  of  1857  and  1837  we  could  resume  specie 
payments,  how  long  could  we  maintain  them? 
The  Secretary  tells  us  that  $350,000,000  of  our 
bonds  are  held  abroad.  The  average  rate  at 
which  they  were  bought,  when  gold  for  long 
periods  was  above  two  hundred  per  cent,.,  was 
less  than  fifty  cents  on  the  dollar,  nor  was 
that  small  amount  paid  in  specie ;  for  he  also 
tells  us  that — • 

‘‘The  opinion  that  the  country  has  been  benefited 
by  the  exportation  of  its  securities  is  founded  upon 
the  supposition  thatwe  have  received  real  capital  in 
exchange  for  them.  This  supposition  is  to  a  large 
extent  unfounded.  Our  bonds  have  gone  abroad  to 
pay  for  goods  which  without  them  might  notHhave 


been  purchased.  Not  only  have  we  exported  the 
surplus  products  of  our  mines  and  our  fields,  with  no 
small  amount  of  our  manufactures,  but  a  large  amount 
of  securities  also,  to  pay  for  the  articles  which  we  have 
purchased  from  other  countries.  That  these  pur¬ 
chases  have  been  stimulated  and  increased  by  the 
facility  of  paying  for  them  in  bonds  can  hardly  be 
doubted.  Our  importations  of  goods  have  been 
increased  by  nearly  the  amount  of  the  bonds  which 
have  been  exported.  Not  one  dollar  in  five  of  the 
amount  of  the  five-twenties  now  held  in  England  and 
upon  the  Continent  has  been  returned  to  the  United 
States  in  the  form  of  real  capital.  But  if  this  were 
not  a  true  statement  of  the  case,  the  fact  exists,  as 
has  been  already  stated,  that  some  three  hundred, 
and  fifty  millions  of  Government  bonds— not  to  men¬ 
tion  State  and  railroad  bonds  and  other  securities — 
are  in  the  hands  of  the  citizens  of  other  countries, 
which  may  be  returned  at  any  time  for  sale  in  the 
United  States,  and  which  being  so  held  may  seriously 
embarrass  our  efforts  to  return  to  specie  payments.” 

Thus  by  Mr.  McCulloch’s  own  statement  it 
appears  that  our  bonds  were  bought  at  half 
their  nominal  value  and  paid  for  in  commercial 
products  which  should  have  been  created  by 
our  own  industry  from  our  own  raw  material 
by  setting  11  our  unemployed  and  poor  people 
at  work  on  the  growth  of  our  own  lands ;”  and, 
if  we  may  believe  the  Secretary’s  statement  to 
which  I  have  referred,  a  large  portion  of  which 
commodities  were  brought  into  the  country  in 
fraud  of  our  revenue  laws  by  11  undervaluations 
and  smuggling.”  For  what  purpose,  let  me 
ask,  were  those  bonds  bought  by  their  foreign 
holders?  How  long  will  they  be  held?  When 
and  under  what  contingencies  are  they  likely 
to  be  returned  to  this  country?  And  a  more 
pregnant  question  still :  what  effect  would  be 
produced  by  the  early  return  to  specie  pay¬ 
ments  threatened  by  the  Secretary  of  the 
Treasury? 

That  I  may  do  Mr.  McCulloch  no  injustice, 
I  answer  these  momentous  questions  in  the 
language  of  his  report : 

‘‘A  large  portion  of  these  bonds  have  been  bought 
on  speculation,  and  will  bo  likely  to  be  returned 
whenever  financial  troubles  in  the  countries  in  which 
they  are  held  shall  make  it  necessary  for  the  holders 
to  realize  upon  them,  or  whenever  satisfactory  prof¬ 
its  can  be  made  by  returning  them,  which  will  be 
when  they  nearly  approach  their  par  value  in  coin.” 

Here  at  least  he  is  right.  Those  bonds,  hav¬ 
ing  been  bought  at  half  the  value  expressed  on 
their  face,  will  be  returned  “  when  they  nearly 
approach  their  par  value  in  coin,”  and  that 
will  be  when  we  resume  specie  payments.  But 
as  Mr.  McCulloch  has  failed  to  pursue  this 
operation  to  its  inevitable  result,  the  committee 
will  pardon  me  for  attempting  the  duty,  though 
in  doing  so  I  may  deepen  the  shades  in  the  mel¬ 
ancholy  picture  of  our  future  which  I  have 
presented. 

When  those  foreigners  who  bought  our  bonds 


on  speculation  perceive  that  by  returning  them 
they  can  convert  them  into  gold  and  double 
their  investment  they  will  assuredly  avail 
themselves  of  the  literally  golden  opportunity. 
Questions  as  to  how  they  can  reinvest  the  pro¬ 
ceeds  advantageously  need  not  deter  them. 
They  know  how  limited  our  stock  of  specie  is, 
how  heavy  the  balance  of  trade  is  against  us, 
and  consequently  that  by  selling  their  bonds 
in  our  markets  they  would  compel  us  to  sus¬ 
pend  specie  payments  again.  Nor  are  they 
strangers  to  the  fact  that  during  that  suspension 
they  would  be  able  to  repurchase  their  bonds 
for  half  the  gold  received  for  them.  Thus  the 
experiment  of  the  Secretary  would  inevitably 
terminate  in  the  impoverishment  of  the  citizen 
and  the  disgrace  of  the  country  by  a  renewed 
and  more  protracted  suspension  of  specie  pay¬ 
ments. 

Mr.  Chairman,  neither  the  Secretary  of  the 
Treasury  nor  Congress  know  whether  our 
currency  is  in  excess  of  the  amount  required 
by  legitimate  and  healthful  trade,  or  if  it  be, 
how  long  it  will  remain  so  if  undisturbed  by 
legislation.  Nor  can  we  settle  these  points  by 
an  appeal  to  experience,  for  many  of  our  con¬ 
ditions  are  novel.  That  would  be  a  curious 
and  instructive  calculation  which  would  show 
the  country  the  precise  demand  for  currency 
created  by  the  operation  of  the  Bureau  of  Inter¬ 
nal  Revenue,  or  by  the  enlargement  of  the  Army 
and  Navy  and  clerical  force  of  the  Government. 

Under  the  discipline  of  Providence  the  south¬ 
ern  people  will,  before  many  years  glide  away, 
consent  to  permit  their  fields  to  be  tilled,  their 
mines  to  be  worked,  and  their  cities  to  be  re¬ 
built  and  expanded ;  and  who  can  tell  the 
amount  of  currency  that  will  then  be  required 
by  the  four  million  enfranchised  slaves  and  the 
two  million  poor  whites,  who  did  not  in  the 
past,  but  are  henceforth  to  earn  wages  and  buy 
and  sell  commodities,  or  for  handling  the  crops 
and  mineral  productions  of  the  South  ?  Since 
we  last  adjourned  the  iron  horse  has  crossed 
Nebraska  on  one  of  the  routes  to  the  Pacific, 
and  his  snort  has  been  heard  in  the  neighbor¬ 
hood  of  Fort  Riley  on  another;  and  during 
the  last  year  three  hundred  thousand  indus¬ 
trious  people,  who  had  been  fed  and  clothed 
through  unproductive  childhood  at  the  cost  of 
other  nations,  came  and  cast  their  lot  among 
us  to  till  our  fields,  smelt  our  ores,  work  our 
metals,  and  manage  our  spindles  and  looms ; 
and  I  cannot  guess  what  amount  of  currency 
these  energetic  people  and  the  westward-march¬ 
ing  column  of  our  civilization  will  require. 
But,  sir,  of  one  thing  I  am  certain,  and  it  is 
that  had  the  Secretary  of  the  Treasury  not  de¬ 
stroyed  all  sense  of  security  in  the  future,  the 
demand  for  currency  to  purchase,  especially 
in  the  South,  mineral  and  other  lands  and  de¬ 
velop  their  productive  power  would  have  pre¬ 
vented  the  accumulation  of  the  immense  de¬ 
posits  which  now  lie  paralyzed  in  bank  or  are 


18 


loaned  on  call  to  speculators  in  the  necessaries 
of  life.  We  unsettled  values  and  made  or  scat¬ 
tered  fortunes  by  the  rapid  expansion  of  the 
currency  ;  and  the  people  implore  us  to  avoid 
another  violent  change  fraught  with  like  con¬ 
sequences,  and  to  stay  the  work  of  contraction 
till  we  shall  have  ascertained,  at  least  proxi- 
mately,  the  amount  of  currency  required  by 
healthy  and  legitimate  trade. 

Mr.  Chairman,  the  Secretary  of  the  Treas¬ 
ury  is  not  a  philosopher — 

“A  primrose  by  a  river’s  brim 
A  yellow  primrose  is  to  him;” 

And  the  thing  that  has  been  is,  in  his  belief,  the 
thing  that  shall  be  forever.  Neither  his  ex¬ 
perience  as  an  “Ingeany”  banker  nor  his  official 
connection  with  the  Government  has  disclosed 
to  him  the  real  relation  of  currency  in  detail 
o*r  in  volume  to  the  business  of  a  community. 
Throughout  his  report  he  assumes  that  the 
currency  is  redundant,  and  ascribes  to  its 
alleged  redundancy  consequences  which  are 
directly  attributable  to  another  cause  but  re¬ 
motely  connected  with  the  question  of  the 
amount  of  currency.  I  refer  to  the  prevailing 
and  traditional  vice  in  our  banking  system, 
that  of  building  credits  upon  credit,  of  banking 
on  deposits,  or  lending  money  by  a  bank  to 
one  man  because  it  owes  a  like  amount  to 
another  who  has  intrusted  liis  funds  to  it  for 
safe-keeping  and  convenience.  «*To  this  vice 
in  our  banking  system,  which  Mr.  McCulloch 
has  done  much  to  aggravate  by  leaving  stupend¬ 
ous  balances  of  the  public  funds  in  favored 
banks,  is  to  be  ascribed  nearly  all  the  evils  he 
mistakenly  attributes  to  a  “redundant  legal- 
tender  currency.”  If  the  corporations  and 
private  bankers  of  the  country  were  prohibited 
from  lending  on  call  the  deposits  intrusted  to 
them  or  using  them  in  discounting  paper,  the 
doubling  of  the  volume  of  currency  would  not 
produce  a  material  advance  in  the  price  of 
commodities  in  general.  This  vice  in  our  bank¬ 
ing  system,  this  banking  on  deposits  or  lending 
that  which  the  banks  owe,  and  to  calls  for  the 
payment  of  which  they  are  constantly  liable, 
aggravates  from  four  hundred  to  one  thousand 
fold  every  modification  of  our  currency,  whether 
it  be  by  contraction  or  expansion. 

Neither  the  price  of  gold  nor  of  other  com¬ 
modities  is  regulated  nor  materially  influenced 
by  the  amount  of  currency  *,  nor  is  the  differ¬ 
ence  between  gold  and  our  currency  evidence 
that  the  latter  is  inflated.  If  the  Secretary 
controverts  these  propositions,  I  will  remind 
him  that  gold  commanded  a  premium  of  185  in 
1864,  and  ask  him  to  let  us  know  how  much  he 
had  contracted  the  currency  before  it  went 
down  to  25,  as  it  did  in  June,  1865  ;  and  again, 
how  much  he  expanded  the  currency  to  put 
the  premium  on  gold  up  again  to  50,  at  about 
which  figure  it  stood  so  long  before  dropping 
to  29  and  ascending  again  to  its  present  price. 


During  all  these  fluctuations  the  volume  of 
currency  was  not  essentially  modified.  What 
a  commentary  these  facts  are  upon  the  theories 
of  the  Secretary  and  his  costly  but  vaunted 
attempts  “to  keep  the  business 'of  the  country 
as  steady  as  possible.”  On  this  point  he  says: 

“  He  has  regarded  a  steady  market  as  of  more  im¬ 
portance  to  the  people  of  the  country  than  the  sav¬ 
ing  of  a  few  million  dollars  in  the  way  of  interest.” 

And  elsewhere,  that — 

‘‘The  Secretary  has  also  deemed  it  to  be  his  duty 
to  use  such  means  within  his  control  as  were,  in  his 
judgment,  best  calculated  to  keep  the  business  of  the 
country  as  steady  as  possible,  while  conducted  on  the 
uncertain  basis  of  an  irredeemable  currency.  *To 
accomplish  this  ho  has  thought  it  necessary  to  hold 
a  handsome  reserve  of  coin  in  the  Treasury.” 

But,  sir,  assuming  that  the  volume  of  currency 
does  not  regulate  prices,  and  that  apart  from 
the  often  fatal  vice  in  our  banking  system  to 
which  I  have  alluded  it  has  but  little  influence 
on  them,  I  appeal  from  the  judgment  of  Mr. 
McCulloch  to  that  of  the  people,  and  ask 
whether,  if  the  volume  of  currency  regulated 
prices,  it  would  not  affect  every  species  of  prop¬ 
erty  equally  or  nearly  so? 

If  prices  are  regulated  by  the  volume  of  cur¬ 
rency,  how  is  it  that  American  wool  is  as  cheap 
in  the  Philadelphia  market  now  as  it  was  before 
the  war?  How  is  it  that  corn  is  unusually  low 
and  wheat  is  commanding  a  higher  price  than 
ever  before  in  the  history  of  our  country?  How 
is  it  that  during  last  month  one  variety  of  cot¬ 
ton  goods,  those  known  as  brown  or  unbleached 
goods,  advanced  twenty  per  cent.,  or  two  cents 
per  yard,  and  another  variety,  bleached  goods, 
declined  twenty  per  cent.,  or  from  five  to  seven 
cents  per  yard?  How  is  it  that  mess  pork 
commands  but  about  half  last  year’s  prices, 
while  the  decline  in  beef  has  been  little  more 
than  nominal?  And  how  is  it  that  in  1865, 
with  gold  at  25,  Lehigh  coal  commanded  at 
the  shipping  point  from  five  to  six  dollars  per 
ton,  and  in  1866,  with  gold  ranging  from  32 
to  40,  the  same  qualities  of  coal  at  the  same 
points  will  not  bring  three  dollars  to  three  dol¬ 
lars  and  a  quarter  per  ton? 

But  I  will  not  weary  the  committee  with  fur¬ 
ther  illustrations  of  the  absurdity  of  the  Sec¬ 
retary’s  postulate.  It  is,  however,  proper  that 
before  leaving  this  point  for  the  present  I 
should  admit  that  a  violent  and  sudden  con¬ 
traction  of  the  currency  at  a  time  when  the 
loans  of  our  banks  are  extended  by  lending 
their  deposits  does  work  an  inevitable  and  often 
ruinous  reduction  of  prices.  It  is  thus :  under 
the  influence  of  contraction  depositors  draw 
upon  their  reserve,  and  the  banks  to  meet  the 
demand  call  upon  their  debtors,  and  they  to  pro¬ 
tect  their  credit  must  sell,  no  matter  at  what  sac- 
j  rifice,  at  such  prices  as  they  can  get.  I  need 
1  not  follow  the  movement  to  its  consequences. 


19 


A  tight  money  market,  causing  a  few  failures, 
has  more  than  once  begotten  panic  and  wide¬ 
spread  bankruptcy,  and  would  now  extinguish 
the  revenues  of  the  Government.  Had  the  Sec¬ 
retary  of  the  Treasury  ascribed  the  fluctuations 
in  business  and  the  inordinate  prices  at  which 
many  of  the  necessaries  of  life  are  held  to 
their  real  cause,  our  habit  of  banking  on  ac¬ 
cumulated  credits,  and  not  pressed  the  purpose 
of  contracting  the  currency,  the  country  would 
not  be  depressed  as  it  is.  Threatened  con¬ 
traction  has  hung  like  the  sword  of  Damocles 
over  the  heads  of  our  producing  classes. 

Let  me  ask,  what  is  currency  and  what  is  its 
function?  Currency  is  that  which  a  people 
have  agreed  to  accept  and  use  as  money.  It 
is  the  medium  by  which  the  small  transactions 
of  daily  life  are  settled.  Its  sphere  is  that  of 
personal  use  and  retail  trade.  Except  in  the 
final  settlements  between  banks  and  their  cus¬ 
tomers.  it  is  not  commonly  used  in  large  trans¬ 
actions.  We  carry  currency  upon  our  persons 
to  meet  current  demands.  You  find  it  in  the  till 
of  the  retail  dealer  and  the  hands  of  workmen, 
who,  when  currency  is  abundant,  are  paid  in  it, 
and  not  in  orders  on  stores  at  which  they  are 
compelled  to  select  articles  from  a  small  stock 
of  inferior  goods  and  pay  high  prices,  as  they  did 
when  currency  was  scarce.  It  is  possible  that 
Mr.  McCulloch  does  not  know  that  the  abun¬ 
dance  of  currency  has  redeemed  our  laboring 
people  from  the  burdensome  taxation  inflicted 
upon  them  by  the  order  system  and  payment 
in  the  depreciated  paper  of  distant  and  un¬ 
known  banks.  Currency  in  its  legitimate  use 
has  no  wider  sphere  than  I  have  indicated. 
Like  all  other  blessings,  it  may  be  perverted,  as 
it  is  when  it  accumulates  as  deposits  in  banks 
and  is  used  as  the  basis  of  large  loans  to  ad¬ 
venturous  operators  or  speculators.  In  the 
heavy  operations  of  business  currency  finds  no 
place.  These  are  settled  by  checks,  drafts, 
and  bills  of  exchange.  Before  the  war  cur¬ 
rency  was  scarce,  and  the  deficiency  was  sup¬ 
plied  by  the  promissory  notes  of  individuals 
who,  by  indorsing  the  notes  of  those  who  bought 
from  them  or  those  oftheir  factors  or  commission 
merchants,  became  debtors  to  the  amount  due 
them  from  others.  It  is  said  that  when  the  war 
began  the  amount  represented  by  the  prom¬ 
issory  notes  of  individuals  was  more  than 
$200,000,000;  but  now  that  the  supply  of  cur¬ 
rency  is  adequate,  few  men  take  such  notes, 
and  none  propose  to  give  them  but  the  people 
of  the  South,  who  have  no  currency.  The  con¬ 
traction  of  the  currency  insisted  upon  by  Mr. 
McCulloch  would  revive  the  credit  system,  with 
its  orders,  for  work  people,  and  its  periodical 
returns  of  wide-spread  bankruptcy  to  the  com¬ 
munity  at  large. 

I  do  not  think  the  Secretary  is  entirely  igno¬ 
rant  of  the  simple  truths  I  have  been  enun¬ 
ciating.  It  would  be  pleasant  to  know  that  he 
is,  for° it  is  not  agreeable  to  be  constrained  to 


doubt  the  motives  of  one  to  whom  we  have 
given  our  confidence.  But  in  view  of  the  com¬ 
munication  made  by  Mr.  Nasby  and  the  fact 
that  the  Secretary’s  theories,  if  carried  into 
execution,  will  promote  speculation,  I  cannot 
help  thinking  that  he  regards  banking  and 
stock  operations  as  the  interests  to  which  all 
others  should  be  subordinated.  He  recom¬ 
mends  the  withdrawal  of  the  greenbacks  that 
the  national  banks  may  supply  the  circulating 
medium  of  the  country,  and  he  wishes  each 
national  bank  to  lie  compelled  to  deposit  in 
one  of  the  Atlantic  cities  a  sufficient  amount 
of  its  capital  to  justify  the  redemption  of  its 
notes  at  that  point.  The  Atlantic  city  to  which 
he  points  is  the  great  center  of  banking  and 
speculation,  and  compliance  with  these  sugges¬ 
tions  would  aggravate  the  speculative  power  of 
New  York  by  the  proportion  such  deposits 
would  bear  to  its  general  fund.  His  theories 
are  in  perfect  accord  with  his  practice,  for  I 
find  that  he  is  in  the  habit  of  furnishing  the 
banks,  and  through  them  speculators,  an  aver¬ 
age  loan  of  about  twenty-five  million  dollars. 
Thus  by  an  official  statement  which  lies  before 
me  it  appears  that  the  balances  in  the  hands 
of  the  national  banks  was — 

June  1,  1866 . $26,335,725  59 

July  1, 1866 .  34,124,171  21 

August  1, 1866 .  33,931,415  22 

September  1,  1866  .  32,590,274  58 

October  1, 1866 .  30,976,979  85 

I  am,  however,  informed  officially  that  there 
was  during  those  months  a  liability  to  draft 
on  these  balances  distributed  through  not  less 
than  three  months  amounting  in  all  to  $14,- 
000,000  by  coupons  in  transitu  or  in  the  hands 
of  the  holders ;  so  that  the  banks  could  with 
safety  lend  on  call  during  the  whole  period 
$25,000,000  to  those  engaged  in  speculating  in 
food  and  increasing  its  price.  Had  $20,000,000 
of  the  sum  been  applied  to  the  absorption  of 
seven-thirties  or  compound-interest  notes  spec¬ 
ulation  would  have  been  less  rife,  our  interest 
account  would  have  been  materially  dimin¬ 
ished,  and  a  slight  approximation  have  been 
made  toward  specie  payments  and  the  ultimate 
redemption  of  the  public  debt.  Doubtless  Mr. 
McCulloch’s  desire  “to  keep  the  business  of 
the  country  as  steady  as  possible”  alone  pre¬ 
vented  this  happy  consummation. 

Sir,  it  is  within  our  memory  that  the  estab¬ 
lishment  of  the  sub-Treasury — the  divorcement 
of  the  public  Treasury  from  thebanks  and  bank¬ 
ing  system  of  the  country — overthrew  the  Ad¬ 
ministration  and  party  that  inaugurated  it ;  but 
it  is  also  remembered  that  so  beneficent. were 
its  operations  that  no  succeeding  administra¬ 
tion  of  any  party  dared  assail  it.  It  had  not 
been  in  operation  a  year  till  it  had  vindicated 
its  wisdom  in  the  estimation  of  every  judicious 
business  man.  Nor  would.it  probably  ever 
have  been  interfered  with  in  time  of  peace. 

,  The  great  convulsion  which  threatened  to  divide 


20 


our  country  interrupted  its  action  which  should 
forthwith  be  restored.  It  acted  as  a  regulator, 
a  natural  regulator,  of  the  trade  of  the  coun¬ 
try.  When  enterprise  ran  into  excesses  and 
unduly  increased  the  public  revenues,  it  with¬ 
drew  from  circulation  and  locked  up  a  portion 
of  the  currency,  and  by  the  stringency  it  thus 
created  admonished  banks  and  business  men 
to  pause ;  and  when,  having  given  an  early 
check  to  rash  operations  and  diminished  the 
current  revenues  of  the  country,  it  gently,  as  by 
a  process  of  nature,  restored  vigor  to  the  circu¬ 
lation  by  the  fact  that  its  payments  were  in  ex¬ 
cess  of  its  receipts,  as  its  receipts  had  just  been 
in  excess  of  its  payments.  As  a  safeguard  for 
the  public  funds,  if  for  no  other  reason,  the  Sec¬ 
retary  should  have  recommended  its  full  res¬ 
toration,  for  during  the  entire  period  of  its 
existence,  as  far  as  I  know,  the  Government 
did  not  lose  by  any  of  its  officers  as  much  as  it 
did  by  the  failure  of  tfye  Merchants’  National 
Bank  of  Washington  alone.  It  was  a  safe  de¬ 
pository  for  the  public  money,  as  well  as  a 
healthful  influence  in  the  business  operations 
of  the  country.  Had  the  Secretary  suggested 
that  it  would  answer  as  well  for  a  mixed  cur¬ 
rency  as  it  did  for  the  era  of  specie  payments, 
and  recommended  its  immediate  reestablish¬ 
ment  he  would  have  done  much  to  give  steadi¬ 
ness  to  the  business  of  the  country,  diminish 
speculative  prices,  quicken  production,  and  in¬ 
crease  the  revenue  of  the  country.  And  I  trust 
that  Congress  before  it  rises  will  pass  a  law  pro¬ 
hibiting  the  deposit  of  any  portion  of  the  Gov¬ 
ernment  funds  in  any  bank,  or,  in  other  words, 
divorce  the  Treasury  from  the  banks  by  reor¬ 
ganizing  the  sub-Treasury. 

It  was  perhaps  too  much  to  hope  for  such 
a  recommendation  from  the  Secretary.  He 
enjoys  the  control  he  now  exercises  over  the 
business  of  the  country,  and  would  not  will¬ 
ingly  surrender  it.  But  for  the  maintenance 
of  an  average  deposit  of  more  than  $80,000,000 
could  the  National-Union-Jolmson  party  have 
extorted  from  the  banks — perhaps  not  directly 
as  corporations,  but  from  their  stockholders  and 
officers,  to  be  accounted  for  in  the  item  of  inci¬ 
dental  expenses — the  large  contributions  which 
the  newspapers  told  us  certain  banks  were  forced 
to  make  in  aid  of  the  recent  effort  of  the  Presi¬ 
dent  and  the  Secretary  of  the  Treasury  to  subvert 
the  popular  will.  But  this  was  but  an  occa¬ 
sional  incident,  probably  never  to  occur  again  ; 
for  I  believe  that  the  future  can  produce  to  our 
country  no  second  Andrew  Johnson,  or  that 
should  it  contain  within  its  womb  another  like 
unto  him  he  will  be  unable  to  find  creatures 
to  sacrifice  their  own  convictions  and  the  inter¬ 
ests  of  the  country  for  the  poor  privilege  of 
unworthily  filling  high  places  in  a  great  Govern¬ 
ment.  That  of  which  I  speak  is  the  influence 
these  deposits,  coupled  with  his  exclusive  con¬ 
trol  of  the  gold  in  the  Treasury,  averaging  about 
one  hundred  million  dollars,  which  he  com¬ 


placently  calls  a  “handsome  reserve  of  coin 
in  the  Treasury,”  give  the  Secretary  over  the 
business  of  the  country. 

Under  the  action  of  the  sub-Treasury,  as  I 
have  shown,  a  payment  of  money  by  the  Govern¬ 
ment  relieved  a  stringent  money  market ;  but 
how  is  it  now  ?  "When  the  Secretary  of  the 
Treasury  is  sacrificing  such  immense  amounts 
of  interest  in  order  to  give  steadiness  to  busi¬ 
ness  the  Government  deposits  are  loaned  by 
the  banks  on  notes  of  short  date  or  on  call ; 
and  if  the  current  revenues  of  the  Government 
be  in  excess  of  its  current  expenses,  as  they 
have  been  throughout  his  administration,  its 
deposits  accumulate  and  swell  the  volume  of 
such  loans.  The  receipts  of  the  Government 
thus  aggravate  the  tendency  to  undue  expan¬ 
sion  ;  and  what  is  the  effect  when  it  is  required  to 
use  any  considerable  amount  of  its  deposits?  It 
is  this:  the  Secretary  notifies  the  banks  thatlie 
is  about  to  call  for  ten  or  twenty  million 
dollars  ;  and  the  banks,  not  knowing  which  of 
their  debtors  will  be  ready  and  who  may  be 
utterly  unable  to  pay,  notify  not  alone  borrow¬ 
ers  of  the  precise  amount  demanded  by  the 
Secretary,  but  holders  of  five,  six,  or  ten  times 
the  amount.  Thus  that  which  should  give 
relief  to  the  market  becomes  an  exaggerated 
caifse  of  contraction,  and  the  payment  of 
$10,000,000  by  the  Government  is  made  to 
interfere  with  business  operations  to  the 
amount  of  $100,000,000.  We  have  all  observed 
this  and  know  that  instead  of  being  a  natural 
operation  the  effects  of  which  should  be  felt 
beneficially,  each  payment  of  any  considerable 
sum  of  money  by  the  Government,  after  a  long 
line  of  deposits  has  accumulated,  produces  a 
perturbation  through  all  commercial  circles. 
The  payment  of  but  $15,000,000  in  the  early 
part  of  last  month  came  near  producing  a 
national  panic  and  damaged  the  credit  of 
leading  banks.  This  system  gives  the  Secre¬ 
tary  despotic  control  over  the  markets  of  the 
country,  and  his  favorites  may  have  ascer¬ 
tained  practically,  as  did  Voltaire,  who  was 
given  to  stock  speculations,  that  “it  is  a  good 
thing  to  have  a  friend  at  court”  through  whom 
they  may  learn  when  it  is  well  to  sell,  because 
things  have  reached  their  highest  price,  as 
Government  is  about  doing  that  which  should 
establish  confidence,  but  which,  owing  to  the 
Secretary’s  efforts  to  insure  steadiness  to  busi¬ 
ness,  will  produce  consternation  if  not  panic 
and  a  general  decline  in  prices ;  and  when  it 
is  well  to  buy,  because  it  suits  the  convenience 
of  the  Government  to  make  another  large  and 
long  loan  to  the  banks.  Such  a  power  over 
the  business  of  the  country  should  be  vested 
in  no  man  ;  and  I  challenge  the  world  to  point 
to  any  fact  in  the  official  career  of  the  present 
Finance  Minister  of  the  country  which  would 
induce  any  judicious  man  to  vest  it  in  him. 
There  certainly  is  nothing  in  the  suggestions 
of  the  report  which  I  am  considering  to  indi- 


21 


cate  that  he  is  a  safe  depositary  for  so  useless, 
so  wide-spread,  and  so  dangerous  a  power. 

But,  Mr.  Chairman,  I  am  admonished  that  I 
should  hasten  to  a  conclusion.  I  must,  however, 
beg  the  committee  to  bear  with  me  while  I 
examine  briefly  another  of  Mr.  McCulloch’s 
suggestions.  It  is  offered  as  a  specific  remedy, 
because  it  is  said  it  will  diminish  the  rate  of  in¬ 
terest  on  our  loans  and  protect  us  against  the 
direful  contingency  of  the  bonds  bought  on 
speculation  at  depreciated  rates  coming  home 
to  exhaust  our  specie  within  a  month  of  the 
day  on  which  we  are,  by  the  magical  agencies 
suggested  by  Mr.  McCulloch,  to  resume  specie 
payments  within  two  years.  It  is  character¬ 
ized  by  the  candor  and  wisdom  which  pervade 
his  other  suggestions.  To  a  shrewd  man  of 
mere  practical  business  habits,  one  not  skilled 
in  the  mysteries  of  u  Ingeany  bankin’,”  it 
might  seem  to  be  somewhat  impracticable;  and 
the  country  regards  it  with  humiliation  and 
disgust.  It  is  this :  that  after  having  carried 
on  the  war  without  an  appeal  to  foreign  na¬ 
tions  or  capitalists  and  without  their  sympa¬ 
thy  ;  after  having  by  our  patriotic  sacrifices  put 
our  credit  so  high  that  the  people  of  Europe 
have  voluntarily  come  and  carried  away,  with 
great  profit  to  themselves,  $350,000,000  of 
our  bonds ;  that  now,  when  peace  is  restored, 
when  we  again  possess  the  custom-houses, 
post  offices,  forts,  an<}  arsenals  of  the  country, 
and  when  our  taxes  are  not  divided  between 
our  Treasury  and  that  of  a  hostile  confederacy, 
but  all  flow  to  our  own,  we  shall  issue  u  bonds 
payable  in  not  over  twenty  years  and  bearing 
interest  at  the  rate  of  not  over  five  per  cent., 
payable  in  England  or  Germany,  to  an  amount 
sufficient,  to  absorb  the  six  per  cent,  bonds  now 
held  in  Europe  and  to  meet  the  demand  there 
for  actual  and  permanent  investment.” 

If  this  scheme  were  practicable,  I  for  one 
would  spurn  it.  With  their  pirate  ships  on  every 
sea,  their  ship-yards  and  factories  busy  in  fab¬ 
ricating  implements  of  war  for  our  enemies,  and 
in  the  face  of  their  hatred,  with  self-reliance, 
of  which  posterity  will  be  proud,  we  marched 
steadily  on  to  conquest  and  final  victory.  And 
now,  in  the  hour  of  our  triumph,  or  in  the 
calm  season  which  should  succeed  so  grand 
and  successful  an  exhibition  of  power,  with  a 
continent  beneath  our  feet  abounding  in  raw 
material  for  the  profitable  employment  of 
every  art,  trade,  and  mystery  known  to  in¬ 
genious  man ;  with  India  decimated  by  fam¬ 
ine,  Europe  disturbed  by  wars  and  rumors  of 
war,  Ireland  in  incipient  rebellion  ;  and  when 
we  offer  to  the  people  of  Europe  established 
peace,  political  equality,  public  schools,  a 
free  church,  and  briefer  hours  of  labor  with 
better  wages  than  those  known  to  the  arti¬ 
sans  of  any  other  country,  this  suggestion 
is  as  degrading  as  it  is  inopportune.  Sir, 
nothing  but  some  such  folly  as  this  official 
proclamation,  as  it  would  be  regarded  by  the 


people  of  Europe,  that  our  struggle  exhausted 
us,  and  that  with  victory  came  premature  de¬ 
crepitude,  can  prevent  us  from  compelling  the 
nations  of  the  world,  by  the  tide  of  skilled 
workmen  that  will  flow  from  their  shores  to 
ours,  to  follow  our  example  and  give  those 
who  produce  their  wealth  culture,  leisure,  and 
the  consciousness  of  free  manhood.  In  such 
an  hour  and  in  view  of  such  a  prospect  I  am 
sure  that  Congress  will  not  degrade  the  coun¬ 
try  by  asking  the  money-changers  of  Europe 
to  lighten  its  burdens  or  help  us  bear  them. 

But  the  scheme  is  hopelessly  impracticable. 
Mr.  McCulloch  may  see  advantages  in  it  which 
others  fail  to  detect.  It  would  serve,  I  doubt 
not,  by  what  he  calls  11  the  trifling  commissions 
to  the  agents  through  whom  the  exchanges 
might  be  made,”  to  found  a  great  American 
banking-house  in  London  with  continental 
branches,  and  might  bless  the  country  with 
the  hope  of  large  gratuities  from  some  future 
George  Peabody  whom  the  Secretary  would 
designate  as  the  agent  for  making  transfers 
and  paying  interest;  but  it  would  not  accom¬ 
plish  the  purpose  its  author  suggests.  With 
such  knowledge  of  human  nature  as  we  possess 
let  us  consider  the  proposition.  Those  who 
hold  our  bonds  bought  them  either  as  an 
investment  or  on  speculation,  and  the  inter¬ 
est  upon  them  ranges  from  six  to  seven  and 
three  tenths  per  cent.  Is  it  probable  that 
those  who  bought  them  as  an  investment  will 
change  them  before  maturity  for  bonds  bearing 
but  five  or  four  and  a  half  per  cent.  ?  Or  will 
those  who  bought  them  as  matter  of  specula¬ 
tion,  in  view  of  the  Secretary’s  assurance  that 
in  less  than  two  years  we  will  resume  specie 
payments  and  enable  them  to  convert  them 
into  gold  at  par,  hasten  to  make  such  a  con¬ 
version?  When  the  leopard  shall  change  his 
spots,  the  vulture  protect  the  dove,  and  hungry 
mice  abstain  from  eating  unguarded  crackers 
and  cheese,  I  will  be  prepared  to  regard  the 
Secretary’s  proposition  as  practicable. 

Nor  need  we  grieve  that  it  is  not  practicable. 
Our  destiny  is  written.  Unwise  legislation 
or  such  reckless  maladministration  as  now 
prevails  may  retard  it,  but  !t  will  be  achieved. 
It  is  written  in  the  sublime  doctrine  of  human 
equality,  which  gives  vitality  and  stability  to 
our  institutions,  and  more  perceptibly  though 
not  more  enduringly  in  the  geographical  posi¬ 
tion,  the  continental  proportions,  and  the  un¬ 
equaled  resources  of  our  country.  Bounded 
by  both  oceans,  with  a  larger  area  than  all  the 
nations  of  Europe,  including  Great  Britain, 
which  lie  between  the  same  distant  parallels  of 
latitude  that  mark  our  limits, *and  embracing 
mineral,  agricultural,  manufacturing,  and  com¬ 
mercial  resources  greater  than  they  combined 
possess,  the  United  States  must  be  the  fore¬ 
most,  richest,  and  most  powerful  nation  of  the 
world.  However  blind  our  Finance  Minister 
may  be  to  this  fact,  others  perceive  it,  and  our 


22 


affairs  will  yet  bo  administered  in  accordance 
with  the  sublime  assertion  of  Gortschakoff, 
who,  in  an  utterance  to  which  I  have  already 
referred,  when  speaking  of  Russia  and  our 
country,  said :  ‘ 1  God  has  given  to  the  two  coun¬ 
tries  such  conditions  of  existence  that  their 
grand  internal  life  is  enough  for  them.” 

Yes,  the  capitalist  of  Europe  will  yet  be  eager 
to  lend  us  money  as  cheaply  as  they  now  loan 
it  to  England  ;  but  it  will  be  when,  by  the  con¬ 
version  of  our  now  profitless  raw  material  into 
fabrics,  by  the  skill  and  industry  of  our  now 
unemployed  citizens  and  the  millions  of  indus¬ 
trious  people  who  are  coming  to  us  from  abroad, 
we  manufacture  more  than  we  consume,  and 
by  rivaling  England,  France,  and  other  con¬ 
tinental  nations  in  tropical  markets,  and  those 


of  other  non-manufacturing  regions,  shall  have 
turned  the  balance  of  trade  in  our  favor.  Then 
Americans  will  be  able  to  compete  with  foreign¬ 
ers  in  bidding  for  our  loans ;  and  in  exchange  for 
cotton,  tobacco,  and  other  staples,  our  bonds 
will  be  returned  to  us  instead  of  woolen  goods 
and  various  other  textile  and  metallic  fabrics, 
which  we  now  receive  but  ought  to  manufac¬ 
ture  for  ourselves.  But  foreign  capitalists  will 
not  take  bonds  from  us  at  four  and  a  half  or  five 
per  cent,  in  exchange  for  those  which  pay  six 
per  cent.,  while  the  balance  of  trade  is  against 
us  to  the  amount  of  $100, 000, OOOper  annum,  and 
with  compound-interest  and  seven-thirty  notes 
afloat  to  the  amount  of  nearly  $1,000,000,000, 
with  more  than  Gascon  vanity  we  promise  the 
almost  immediate  return  to  specie  payments. 


» 


